.jpg)
What’s up everyone! A huge problem I’ve seen since the pandemic began is that people do not understand the difference between inflation and appreciation.
Unfortunately, this leads many to think they are better off than they actually are.
For example, since the pandemic began home values have risen 10-15%. A suburban California home worth $700,000 last March might sell for $900,000 today. If you only put $100,000 down, you're looking at well more than double your money (after fees) if you sell today.
Now that you’ve got $200,000+ for a downpayment instead of $100,000 you can go buy a doubly nicer home right? Wrong!
That’s because that $2 million dollar home you’ve been dreaming about is now $2.5 million+. When all homes rise in value together (inflation) the gap in dollar terms between a lower, middle, and upper-class home widens.
This makes sense to you when you think about it. Your salary hasn’t risen 10%-15% in the last year like housing has. In fact, because of the effects of COVID-19 no one in your company got a bonus this year. When measured against a real scarce asset your salary is worth less, not more. Were it not for all time low interest rates, you wouldn’t even be able to afford the same amount of house you could a year ago.
Now this might sound and feel counterintuitive. You’ve got an extra $100,000 plus from selling your home. How can you be further behind?
It’s because like so many other people you are confusing gains realized against inherently deflationary goods and services with losses relative to other scarce assets.
Fifteen years ago an iPhone was scarce. Today it is not.
Fifteen years ago Apple stock was scarce. Today it is scarcer.
Since the pandemic began the cost to own a share of Apple has doubled. So that home you owned that rose in price from $700,000 to $900,000 lost value relative to Apple stock.
This is why you must price what you have relative to other scarce assets. Apple stock has APPRECIATED relative to housing. Apple stock can buy more real estate, while real estate can buy less Apple stock. That’s real appreciation.
Don’t let gains realized for all people because of the deflationary force of technological innovation fool you. Yes we are all better off for having iPhones in real terms, but we are not all better off relative to each other.
In ten years we might all have self-driving cars, but will we all have beach houses? I don’t think so.
So step one, protect yourself. Own real scarce assets that protect you from inflation. Step two, think in real percentage, not dollar terms. It’s what the best investors do and it’s the way to the beach house.
Finally, take a step back. Price your standing in society relative to scarce assets. If you do not you are letting the benefits of technological innovation mask the truth.
Content That Will Make You Smarter:
_(cropped).jpg)
Analysis: Oprah With Meghan And Harry
In this article I break down royal's Meghan and Harry appearance on Oprah.
Quote: "When I worked at the U.S. Embassy in Ankara, Turkey I helped plan then Vice President Biden's visit. For weeks we went over every minute detail from where he would stand to what he would say and why. Though you may not see it onscreen, the lives of Oprah, Meghan and Harry are not far from this extreme level of calculation."
The Stimulus Package Won’t Cut Poverty, It Will Accelerate It
Bottom Line: This is simple math. When you pump the economy full of dollars assets will inflate in price to reflect their representative value. Poor people don’t have assets and are left even further behind.
Gold Mountain Discovered in the Congo
Yes, a small village in the Congo really did discover a mountain of gold.
Initial reports indicate the soil is 60-90% gold, which seems unbelievable. Videos from the scene show residents frantically digging and taking away anything they can. There are now reports that the government has banned further mining and is hunting down anyone and everyone to take back the gold. It's unclear how effective this will be, as Reuters reported the military showed up first, was confiscating gold from the people and now is also banned from the site.
As the saying goes, This Is Africa.
Also, the BBC wrote an article about this in “pidgin,” a grammatically simplified version of english common in the area, which I personally found very hard to read.
The Construct -- Jeffrey Epstein
In this phenomenal podcast, Thiel Capital managing director Eric Weinstein recounts his encounter with Jeffrey Epstein and explains why he believes Epstein was an intelligence agent, likely of Israel's Mossad. Eric's courage to not conform to heterodox thinking and mainstream narratives is extremely refreshing, particularly because he is a high profile public figure who risks reputational damage.
Quote: "Sometimes you discover that something is not right only because the explanation for everything that can be seen doesn't add up."
.jpg)
