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Compared to What?
Written by Steve | Published: |
Perspective is an interesting animal…
On the July 4th holiday I was driving with my boys to the movies. We were a little late and as I pulled up to a traffic light the car in front of me decided to stop at the light while it was yellow.
My first response was “what is this knuckle-head doing stopping at a yellow light before it turns red, we almost rear ended him!” Then I noticed something…
I saw a Veteran Air Force sticker on his rear window, an Air Force license plate frame, and a handicapped emblem on his license plate.
It was abundantly obvious that this driver served his country and paved a way for me to have the freedom to attend a movie on a national holiday.
In an instant my perspective completely changed. I went from mildly upset to abundantly grateful.
When we look at these markets right now perspective is very important. I would like you to remember the phrase “compared to what?” and repeat it often.
Let’s take an example.
Many are saying “Housing right now is so ridiculously expensive…”
Compared to what???
Look at this chart it shows the median home price over the last 50 plus years as well as the price for rice over the last 50 years.
You will notice that the price for homes and the price for rice has gone up substantially, but when you compare the two the price for rice has actually increased faster.
In other words, if you could have put enough rice in a silo and let it sit for 50 years it would allow you to buy almost two homes for that same amount of rice.
I’ve heard this same thing apply to chocolate, candy bars, oil, gold etc.
So what is the lesson here?
The first obvious lesson is that by owning good assets they will appreciate over time.
The second more critical thing is that inflation is swindling away the world’s wealth.
I have heard of inflation being called the “stealth tax” because it doesn’t feel like a tax but it is very much driven by the Federal Reserve and monetary policy.
But what can you put your money in that isn’t getting devalued and depleted by market cycles?
This is why when we visit with our clients we discuss an “indexing” strategy that will show them how they can gain profits in the good years and in the bad have protection from loss completely.
This gives my clients the quiet confidence that the assets they own are only going in one direction…UP.
Then if you are more advanced we can show you how to use bank financing to leverage this strategy giving you even more power to conquer the inflation beast.
If it sounds interesting just let me know and we will find a time to visit together and see if it is a fit for you or not.
