#1 Insight and Hindsight: economic prospects and the impact on your finance

It has always been surprising to see people reading carefully the manual of their latest gadgets while ditching information about their own personal finance. As I’ve been investing on the stock exchange since 2002 (forget wannabee GameStop traders), while surviving several crises, my point of view may help. I believe I can “guess what the music might do” (check “Margin call” movie).

Of course, you are free not to believe me, especially as my current project is about travel (see karambol.io) and not finance. However, finance was my academic background and I did see the implosion of the mortgage industry from the inside. Let’s agree to agree or to disagree! Here are my predictions and some solutions.

1) There will be a recession. The question is more about its intensity, varying from mild to the end of the world [2023]
We are in the unknown as this is only the second time in modern history that central banks stop buying bonds while rising interest rates at a super rapid pace. Some may recall the first time (2013 taper tantrum). Buckle up! Either turn everything into cash (safe approach) or short the market (risky but potentially rewarding approach). A potential timing to sell the market: ceasefire in Ukraine followed by a market rebound.

2) Euro value is at stake [2023]
I wouldn’t talk about Euro existence… yet. The European Central Bank is stuck between the high level of inflation and the fate of Italy whose cost of borrowing is skyrocketing: moderate to high risk to see a remake of the 2010 European debt crisis in various flavors. Some possible investment: New Zealand obligations (extremely safe, exchange rate not too bad in comparison to USD) and, on a longer investment horizon, Chinese obligations (the Yuan is expected to become as important as the EUR and USD as reserve currency, limiting arbitrary devaluation).

3) Poor countries will face unrests [2023]
The inflation is making life particularly hard for the poorest. Think of Sri Lanka. It wouldn’t be the only country. Recommendation: if you’re on the stock exchange, check the exposure of your portfolio.

4) US, Australian and Canadian housing market will turn ugly [Mid 2023, 2024]
We’re not in the 2008 financial crisis situation. But if you own houses and appartements, it may be the time to turn everything into cash, become yourself a tenant and buy everything back 2 to 3 years from now. If you’re a first-time buyer, wait. These advices apply to other countries as it is heavily correlated to situation 1).

5) Bit… what? [now]
Last but not least: Bitcoin and cryptos in general. It seems that the total valuation of cryptos exceeding the gross domestic product of the most developed countries didn’t raise an eyebrow… until recently. Except for specific cases (hiding money, money laundry, poor countries with very unstable currencies etc.), I never understood the craze. The kind of variation you get on that market could be replicated on shares, stock index and so on, with the guaranty that your custodian account-holders won’t disappear overnight, while representing real asset values. Cryptos are living a 2008 financial crisis on their own with its lack of regulation, shady operations and leverage products. Many other actors are expected to disappear.

TDLR: Turn everything into cash. You may lose some money because of inflation but you won’t cumulate two negative effects.

If some of you see some opportunities, feel free to share them in comments. In the meantime, let’s bootstrap our company while all competitors freeze most of their investment!