question for BP members???

Question

I'd like some replies from BP members on a hypothetical question. These are really wierd times with unprecedented changes occurring in the economy regularly. 
     Here is the question. If someone has done all the neccessary items, real estate, metals,etc and still has cash available, what would you spend it on? I'm curious if cash would be a position to be in or not? 
     Would you add more R.E.? Financed? Free and clear?  Stay in cash? I realize this would be a somewhat enviable place to be, but the times are interesting. What would you do? Thanks for any input or ideas. Rich

Jim Wineinger · Answer

Rich, I have a slighty different viewpoint. 
          In these interesting times, if things go sour you have to rely upon yourself totally. The system collapeses and therefore there are no banks. This defeats the treasuries, foreign currencies, ect.
          
          Relying upon ourselves, RE for protection will be king. But to that those that help others in the same area (community) will draw to you a group of people that will help protect any assest that you have stored away. Since you are helping them out with shelter, food, ect they will be your protection. You will in essence become king of your community. 
          
          At some point (extended interesting times) the storage will run out, so the area will need to be "farmable" and "huntable", but not necessarily tropical as that tends to limit the fresh water availability with the "salty" or mixed "murky" waters. A good healthy forrest nearby will also be a necessity as you can actually survive by eating nothing but leaves and plants (polk salad anybody?).
          
          This I would repeat in a many "ideal" locations as I could find even if it only has the farmland, or the forrest land.

You actually would be building your own ideal community.

J Scott · Answer

In my opinion, both the New Zealand dollar and the Aussie dollar are good diversification mechanisms, as their value is tied heavily to the natural resources coming out of those areas (as opposed to being tied to the US dollar).

Plus, Australia and New Zealand have proven that they're not too keen on following the actions of the Federal Reserve; correlation to the US dollar is relatively low, and even interest rates are still relatively high in those countries.

Jason Wheeler · Answer

You don't want to overextend yourself but excess cash does no good.  Put it to work somewhere.  I agree it is good to have some liquidity.  Real Estate may not be the answer for you.

Ron H. · Answer

Here are several ideas for you to ignore or consider according to your judgment:
          
          - Following up on the currency comments, you may want to consider the Singapore Dollar or the New Zealand Dollar.  On the other hand, the Dollar has been making a bit of a comeback, hasn't it?
          
          - Since you're going to Brazil, consider land in Argentina or Uruguay.  For example, just in February, several lots in northern Argentina as follows:  1,530 hectares (+/- 3,780 acres) priced at US$600/hectare.  Stiff right?  Of course, this particular one had 4 stables and a house, but no animals, tractors or equipment.  And a couple of kilometers on dirt roads to the pavement highway.  Many more like this even now. Hopefully this is enough for you to judge the merits for yourself.
          
          - And my favorite:  JV/investment in media buys/internet traffic arbitrage.  This one requires a small investment, say $1K to $5K to test a CPA offer as well as the quality of traffic that a particular ad network has.  As you are testing, you optimize the campaign until it is profitable.  Once profitable, you probably ramp up until you're spending at least $30K, up to $100K.  You're shooting for a ROI of 50% minimum, ideally over 100% (per spend, meaning the ROI may be monthly, weekly or even daily).  You bring the money, the media buyer brings the know how/traffic.  The best part is that you can pyramid your profits after the initial investment.  Right now, media buyers/publishers are running into the same problem as real estate investors:  too many opportunities, not enough money.  This is partially because the amount of display traffic inventory is gigantic, but also because the advertisers take 30 to 90 days to pay.  So find a publisher, team up, and split the profits.  If you keep reinvesting the seed investment money, the ROI can be more than 100%/month, or even week, though it is not sustainable for all 52 weeks due to the fact that campaigns have a natural life cycle. 
          
          Hope this helps and I apologize for not taking more time to make my response more cohesive!
          
          Best,
          Ron

Matt Eilers · Answer

If someone was concerned about a complete collapse of the system, then I would think owning land in a tropical environment where you have the ability to live off the land and have access to fresh water.  You can have metals,cash... but what good does that do if you live in a big town and the local grocery store is empty do to a system collapse.

If someone was concerned about a turbulent economic ride, then I would vote cash as I would think that what has happened lately would serve as a guide and thus make for great buying opportunities.

Kevin C. · Answer

If you're concerned the economy in the US is headed for a complete meltdown, then stock up on water, food and ammo.

I don't think anyone would care about precious metals, stock certificates, real estate, or stacks of cash - what they will care about is food, water, shelter and protection.

A few bottles of water and cans of food would be powerful bartering items.

Matt Eilers · Answer

I would be interested to hear about your thoughts on Brazil or your impressions once you return.
Have been hearing some good things about the Fortaleza area lately.

Matt

Loc R. · Answer

Rich,
          
          Assuming financial independence with some cash on the side, I would do something to improve my community.
          
          My personal long-term vision is to have a home with a trade school to give people a second chance at life.  They would learn something in the construction trade.  From there I would still buy, rehab and sell homes using these guys.  I would improve neighborhoods at a time.
          
          On the other hand, if you're talking about simply improving your position even further, I would consider the classics:  food, water, medicine, gasoline, and ammo.  Lots of ammo.

Rich Weese · Answer

Thanks Matt- interesting suggestions. Brazil is a sleeper for me. I'm scheduled to visit in nov-dec to look at real estate. I lived in Brazil for 2 years and eu falo portugues! Rich

James Harkness · Answer

Two other considerations:  1.  Fine art... A Picasso piece just sold yesterday for 106 million.

2.  Vintage guitars.  There are really few investments that showcase such a rapid, steady increase in value.  But you have to know your stuff.

I'm not saying that this is necessarily what I would do with the extra money, just thinking a little outside the box to offer some different suggestions.