OK, see that picture?
That's me and Nick at the Leafs Game 1 of the Stanley Cup playoffs.
It's a bit fuzzy but you can see the joy and hope and excitement on our faces, right?
Well, that lasted about 90 seconds.
And it was literally ALL downhill from there. The only good thing that comes from being a lifelong Leafs fan is the resiliency you build to disappointment.
I mean, it's no big deal that we got crushed (brutal calls by the refs by the way, just brutal!!)
We're so used to getting crushed that it's easy to roll with it.
I'm actually worried about what happens if they win a round, or two...or three!
This city will explode. You have no idea. Most people don't know this, but there are so many Leafs fans with pent-up demand to party that it's going to get wild in T.O. if the Leafs go on a playoff run.
But, you know, let's not get ahead of ourselves.
Nick and are I back at the Scotiabank Arena for Game 2 tonight.
Go Leafs Go!!
And speaking of pent up demand...
Have you seen this headline from the Financial Post yesterday?
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Now even if we hand out raises to federal workers it could end up increasing inflation rates again, LOL!
So now we can't even give people a living wage without causing groceries to go up.
Scotiabank is even estimating that the strike alone could cost the government up to $200 million a day.
$200 million that we don't have of course...which means more money printing and debt creation at the federal level.
Which then devalues the Canadian dollar even further.
Fun times, eh?
You can't make this stuff up.
Soon enough we'll be buying cheese to protect our wealth like they are in Turkey.
Check out this headline from today in the Financial Post:
Source: https://financialpost.com/
Are we all going to be buying cheese soon?
Well, luckily, here in Canada we have access to other options.
Most North Americans don't understand just how lucky we are. So many jurisdictions around the world don't have options.
People in many, many countries just can't get access to good assets.
We can.
So it's strange to me that you can see the writing on the wall, that our dollar is going to continue to be devalued at a fast rate, yet many people don't take any action.
They think that money inside a financial institution alone is "diversification".
Nothing could be further from the truth.
Just ask the UK pensioners last Fall when the entire UK gilt market froze up and almost wiped out their pensions (all investments were close to being sold to cash).
Canada's economy and value of our dollar is highly dependent on the U.S. and what the U.S. does.
So to get an idea of where Canada is headed we can simply look at the U.S. financial situation because we'll follow what they do almost exactly (and sometimes more aggressively).
Check out the Congressional Budget Office's most recent deficit projections:
Source: https://www.cbo.gov/
They just get larger and larger and larger.
And they NEVER account for a recession.
Which would make the deficits even larger again.
That's more money creation and more devaluation of the dollar which shows up in higher real estate prices, higher grocery prices and pretty much everything.
Not always at the same time, but eventually everything goes "up in price" because the dollars "lose value faster and faster".
From the same report, here's the U.S. federal debt forecast:
We have been tracking this chart since 2008.
Here's what we've learned:
They are always conservative! The debt is always higher.
Which means even more money printing or QE or grocery rebate cheques or whatever.
More currency devaluation is always the result.
Check out this chart from the U.S. Treasury:
Look closely at the line from 1980 to 2020.
How high did real estate prices and food prices and energy prices go over the last 40 years?
Are you ready for the next 40? Things get wild pretty quickly.
And remember, they are always conservative in their forecasts!
Which means we need to prepare for even more money printing and even more currency devaluation than these charts show.
Remember, Canada follows along with the U.S. spending...sometimes at an even faster rate.
(Quick Aside: On May 9 we have our first Rock Star Inner Circle "Members Only" Networking Bonanza with special guest speaker Ben Rabidoux...where he'll be sharing some of the latest Canadian data on the real estate market. Members can register by visiting www.RockStarMemberEvent.com)
So now let's address the question:
Here's the thing...
To us, you want some percentage of your net worth outside of the financial system.
And hard assets (assets that cannot be created easily) are a great thing to own when more and more dollars are being printed.
Real estate that you own directly fits the bill.
Gold can be that.
Bitcoin, of course, is that too.
Heck, it can be art, land, Rolex watches, gems, jewelry...pick your favorite.
So the answer is yes, real estate is absolutely still a great thing to own in our humble opinion.
Last week, we covered some of the wonderful benefits of income property (and shared some of the pains of owning it too! LOL).
Check it out here if you missed it.
You always have to be nimble with your strategies to make the numbers work.
Over the years when rates went up we did a lot of "rent-to-own" property investing because of the large up-front option fee that would help our cash flow.
We also did student rentals because of the cash flow on them.
As rates came down it was easier to make the numbers work with straight rentals but in this era that's not the case.
But the bottom line is this...
When the government themselves are telling us they are going to debase your dollars more and more and more...and likely faster and faster and faster then you have two choices:
a. You can stick your head in the sand and wait until you are forced to buy feta cheese to protect your wealth.
b. You can stay ahead of the destruction and buy hard assets right now.
For us, it's income-producing real estate, Bitcoin, and some gold.
You pick what's right for you.
But please don't think you are diversified if you have 100% of your wealth in some basket of equities inside a bank that is then wrapped inside a government-controlled RRSP.
When you need some cash quickly it may not be readily available to you in such an instrument.
This is only our 2 sats, of course.
Enjoy the rest of your week.
And please pray for the Leafs, please.
Even if you don't like them or don't follow them just think of the party we'll have if they do some winning!
We can use everyone's prayers, we need them actually! LOL!
Good times.
Chat next week!
Tom & Nick
p.s. We have a free introductory real estate investing class coming up in a couple of weeks. You can jump on that and save your spot for it here.
