Land in Abidjan
I’m thinking that in 5-10 years time I’m probably going to regret that I didn’t buy more land in Abidjan. A strong case can be made for it as an investment (but that’s for a future post), but it’s not bad as a store of value as well. It actually feels safer to have money placed in land in Abidjan (given that the title is secured) than in a lot of other places. That’s linked to me having pretty pessimistic macroeconomic views.
Very briefly, I think:
- China is going to have a real estate crash – impossible to say when, but I think it will happen. This will reduce the demand (and prices) for various natural resources and cause stock markets to go down world wide.
- Most of the countries in western world (plus Japan) have structural budget deficits, that seem difficult to close for political reasons. Instead they are borrowing and/or printing money to cover budget shortfalls which isn’t sustainable and will end in disaster if it goes on for too long.
- The banking sector (especially in Europe) is still over-leveraged and a second financial crisis might well happen.
With all this, it’s hard to find a safe store of value. Even having US Dollars or Euros on a bank account doesn’t feel entirely safe – not because the bank will default, but because both the EUR and the USD could lose value dramatically.
Where am I gonna put my money?
Here’s Jim Rogers on BBC Hardtalk voicing the problem of where to put one’s money: [He is more positive on China than I am though]
There’s going to be huge downsides, there’s serious problems. Where am I gonna put my money? US? the UK? They’re bankrupt. Why would I take my money out of a place that is having a dip [China] and put it into a bankrupt country?
The problems are that it’s not very liquid and that you don’t have a very strong rule of law to back up your ownership rights.
- Currencies backed by countries that have low debt, a strong fiscal position and strong rule of law: Norwegian crown, Swiss franc, and maybe Singapore dollar, Chilean Peso and Canadian dollar.
- Gold mining stocks of companies with strong balance sheets and maybe gold itself although it has gone up a lot.
- Stocks of well managed companies with strong balance sheets producing stuff that are close to the base of the Maslow’s hierarchy (eg agriculture). These should be well positioned in a crisis scenario.