So today we're going to talk about are we heading for a recession
and things that you guys could do to prepare for that recession.
And at the end of this video, I'm going to share with you my own personal
investing strategy because I believe we're heading toward a recession.
So be sure to stay to the end for that.
So I found this and of course, this is humorous, but it makes a very good point.
Recession is like recess, but longer and no snacks.
And we're starting to see that people are giving up their snacks.
They're spending some of their savings and their hard earned money toward things
like fuel and rent and food and those kinds of things.
And that's what this means in this video.
We're going to talk about how you can take steps to better
prepare your finances and be in a great position moving forward.
So first, let's look at where we are.
Now, I call this the hat trick, which, of course, had soccer
or hockey or even cricket, which is where the term came from.
It basically means three, three goals or three things.
And I'm going to focus on
these three things Of course, you all know we have inflation rising.
You all know that we have interest rates rising.
And if you don't know, you need to pay attention to people's savings rates
because those are going down right now as people are using their hard
earned savings to be able to pay for things
that are rising as a result of these two things.
So I call this the hat trick.
These are not good things, but they're producing
all kinds of issues, which we're going to talk about next.
First, we'll start with inflation.
And as you know, the government said that it's transitory.
We all know that's not true.
We're up now over 8%.
And even if it comes down to seven or six or five, that's
still too much as compared to the way it was not even a year ago.
This over here is eroding people's savings and their personal net worth
and it's started to show up in the economy.
So, of course, the Fed has now moved to increasing rates
and they've done so twice in the last few months.
And of course,
they're going to meet again in mid-June and they're going to meet again
by the end of July, which means that they're going to meet two more times
before the end of the summer to put it very simply,
an increase in rates depresses demand, period.
You take it any further, it can actually crush demand.
And the what we're going to call demand destruction.
And lastly, the Fed is moving from quantitative easing
to quantitative tightening.
We're going to do a video on that.
But that's a massive difference from what the Fed's policy has been in the past.
The third thing, which is new, is that people's personal savings are down.
If you think about it, it makes complete sense.
Mortgage rates are up.
Their mortgage payments are higher. Rents are up.
Their rent payments are higher.
Food costs are up. Fuel costs are up.
Travel costs are up.
And people are dipping into their savings.
What before they had a growing savings rate and now we're seeing a decline.
So the next slide is where we are.
This is reality where we are today.
So let's just start with these slides and move through them
because they're all exactly where we are at the moment.
The first one is the global supply chain, which we all know about.
And unless you know something I don't know,
I certainly haven't seen anything to correct this.
In the near future, things like the war going on between Russia and Ukraine
and China, still a locked out impact this significantly.
So what this means is that prices are going to continue to rise
because of supply and demand.
Less supply, more demand.
The next one is crude oil.
As you guys can see what's happening just from the beginning of the year,
obviously, you're starting to see that as you fill up your own vehicles.
This, of course, is inflation.
This, of course, affects the global supply chain.
It's all interconnected based on what the current administration is doing.
I don't see this getting any better any time soon.
For other things that are happening today that are super complex, other things
that you need to take
note of is, one, the bond market the bond market is in trouble, too.
Surging interest rates, which we just talked about, are pushing
the mortgage application and demand down by almost 40% from just one year ago.
This article just came out.
The stock market has been tumbling as of recent and people are actually
moving into cash and into real estate and for the stock market.
And crypto, of course, is also crashing at the moment.
Now, these are very complex things, and some of you are going to be very
biased on one side or the other.
I just don't care your position.
This is actually happening.
That's all I'm trying to say.
This is factual right now.
And all of these things are creating uncertainty and consumers
and investors minds.
And that is the point.
What is exactly a recession?
It's just a term used to signify a slowdown of general economic activity.
That's it, guys.
That's what we're going through right now.
In more technical terms, in macroeconomics,
the recessions are officially recognized as two consecutive quarters of negative
GDP growth or gross domestic product, and we're certainly seeing that now.
So the big question, what to invest in during a recession?
Probably the biggest thing that you guys need to be concerned
about is this is what's happening with professional money managers right now.
They're moving to cash even in these high inflationary times.
They're moving to cash.
There's a great report that just came out with Bank of America,
and the professional money managers are moving to cash in.
In fact, the average cash balances among fund managers, that's manager money.
That's your money, guys, surged to a 20 year high of 6.1% in May,
with participants naming cash as the asset class they were most bullish on.
That should tell you something, guys.
Cash is king, of course, but the negative side of
that is we're also in high inflationary times.
So if there's anything that I want you to learn from this video, it's this.
Make sure that you have plenty of cash reserves going into these headwinds
that we're starting to see.
Now, for all of you who waited to the end, these are sectors
that traditionally perform year over year during recessions.
As you can see, we've got a lot of them here.
And some of them I have.
And some of them I don't have. Some of them you might have.
Primarily, these are people trying to drive you into stocks.
But be very careful because stocks are paper
what you really want is actually the hard asset, if you can.
For example, for real estate, you can buy land or you can buy into a stock.
What is physical one is paper.
That's my point.
So now let me walk you through my allocation
or what I believe is going to be a very recessionary time.
So the first thing is, obviously, you guys know this is a real estate channel.
I've got about 50% of my allocation in real estate using both debt and equity.
And I believe that real estate
is a massive inflationary hedge as we move into this recession.
The second one is business and it's about 20% now.
They're either businesses that I started or businesses that I invested in
as an LP, but not necessarily in a stock as a limited partner
in somebody else's company.
So I've invested in consumer staples, I've invested in energy
I've invested in health care, I have invested in real estate, obviously,
and utilities.
These are all things that I'm looking at as we head into these recessionary times
and then the last three are all about 10% each,
and this is gold, silver and cash.
So I believe that you need to have about 10% in reserves
in cash, about 10% in silver and about 10% in gold.
Now, these are my allocations.
I'm not suggesting you do the same but this is what I'm doing.
And one thing to note here, I'm not investing in a stock.
I'm investing in physical silver.
I'm investing in physical gold.
And I actually have cash in and outside
of the bank away from my personal resident.
All three of these things I have in physical form,
they're not in paper and they're not in banks
and they're insecure locations outside of my residence.
And this is very, very important.
I believe to have some cash and some metal outside of the banking system.
Now, I do want you guys to understand,
I am not a conspiracy theorist this is not my plan B.
These are just moves that I'm making in the event
these kinds of things can potentially happen.
Lastly, guys, I'm not trying to convince you to follow my model.
I'm just trying to tell you what I'm doing as I believe we're going to start
to have these headwinds
go out and do your own research and invest in what you want with a mindset
that we potentially might be heading into recessionary times.
So with that, thank you guys for watching.
Please hit the like subscribe notification bell and I'll see you in the next video.