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Let’s get into today’s topics….
The Coming Recession
The time has come for the economic system to reset, i.e. recession. Recessions are natural market reactions caused by different factors based upon which phase we are in.
The economy is managed by the 4 phases of the “business cycle.” Which are:
Expansion
Peak
Contraction (recession)
Trough
Currently, we are in the first part of the contraction phase, which will last until mid-2024.
During the deeper part of the contraction, deflation( fall in price levels) will make an appearance. Falling prices will accelerate the trough phase. During this period;
Savings will be depleted for the average person
Unemployment will go above 5%
The S&P 500 will slide to a range of 3000-2700
Note: When the S&P hits the above points level this will be seen as market bottom which signals to seasoned investors to buy in at these lows.
The Return of Inflation
Currently inflation has been trending down in regards to energy cost. But a sleeping giant has been brewing since 2020. The lockdowns in China have created pent up demand from their citizenry.
Remember, China is inflationary if it shuts down and when it opens back up.
China has begun loosening covid restrictions and the people want out. And with them comes tons of disposable cash to spend abroad. This will cause an increase in services inflation. This will cause the Fed to react.
I believe as the fed halts rate hikes inflation will stop trending up and gradually increase.
For the long-term outlook, inflation will go back up as we begin to onshore and reshore manufacturing. Higher cost will be the official price for the security of the supply chain.
Overall we will not go back to the inflation rate of the early 2000s.
I am actively monitoring this area and will report back as the situation evolves.
Note: Another area to watch is the rental real estate sector in hot markets. This resurgence of travel will cause a boom that locals might not care for.
What’s to Come…
In this new phase of society, we are going back….to the future. Our future is going to look a lot like our past and this will determine how we survive and thrive.
What I mean is, I think we are going back to a society of Lords and Serfs. While everyone is concerned with money and income, there is a growing resource gap.
The resource gap is extremely concentrated in the hands of institutions controlled by tight-knit power circles that will fight among themselves.
One thing that alarms me is that pension funds via big banks have been net buyers of real estate communities and subdivisions. And local governments have been allowing private property developers to bid on jobs to revitalize economically dead areas of major cities throughout America.
As private investors, I understand this means there will be a lot of opportunities to invest in such projects via private funds and reap a handsome mid-to-long term profit.
Question is, where does this leave the average person? Typically nowhere. Access is always granted to those who are in certain circles. Unless you have an access point, which is what Off-Grid Income Premium is all about!
I have been closely monitoring niche opportunities. Yes there are entry points to this new financial revolution. We will discuss these opportunities with Off-Grid Income Premium subscribers. Join now to lock in a low rate.
For retail investors, this is a wait and see while you hunt season.
While you explore opportunities parking excess cash in CDs, high-yield savings, and money market accounts might be worth your time to look into.
Best,
J.D. Smith
Off-Grid Investor
Keep in mind this letter is in no way personal financial advice or should be seen as such. This is strictly for educational purposes. You should always seek the advice of a licensed professional that understands your financial position and can guide you further.