I've spent most of the day today reading up and reflecting on the current state of the global economy - particularly it's response to the C0VlD-19 pandemic.
Based on all I know, it seems like 2021 will be a total shit show, and I'm placing very big bets accordingly.
Before I get into the gritty details (which sound horribly negative), I don't view this as a shitty year for me, or you, personally. I view it as an opportunity to play an interesting and challenging hand that life will deal all of us.
Now onto the prediction...
The current state of affairs
I don’t really see us coming out of the Corona-lockdown mentality in 2021 in any meaningful way. This was a hard conclusion to come to grips with. As an entrepreneur, I'm a relentless optimist, and I hate the idea of my business and life being affected by Corona for another year.
But, it will.
The rationale is simple: the powers at be aren’t even factoring the economy into their decisions.
The only thing they are gauging all decisions against are total death counts and total case counts, which are being inflated by official orders from the CDC (they want to make sure they have the broadest definition of a "Corona case" and "Corona death" as possible).
This means a few things:
I'm not a pessimist, just trying to see the world as it is.
As a result, I evaluated where I can invest my two most valuable assets: my time and my money. Since my time investments are very particular to my own business dealings, I'll focus on my assessment of monetary investments:
Possible Monetary Investments
Based on this assessment, I'm planning to do the following:
What are your predictions for 2021?
If you have a differing opinion on these scenarios, I'd love to hear it – particularly if you think I'm flat out wrong on any of this logic. I'm far more interested in knowing the truth than being right here, and I understand that several people have a totally different perspective than me.
(@JScott , @James Fend and @Kak, I'm looking at you!)
Based on all I know, it seems like 2021 will be a total shit show, and I'm placing very big bets accordingly.
Before I get into the gritty details (which sound horribly negative), I don't view this as a shitty year for me, or you, personally. I view it as an opportunity to play an interesting and challenging hand that life will deal all of us.
Now onto the prediction...
The current state of affairs
I don’t really see us coming out of the Corona-lockdown mentality in 2021 in any meaningful way. This was a hard conclusion to come to grips with. As an entrepreneur, I'm a relentless optimist, and I hate the idea of my business and life being affected by Corona for another year.
But, it will.
The rationale is simple: the powers at be aren’t even factoring the economy into their decisions.
The only thing they are gauging all decisions against are total death counts and total case counts, which are being inflated by official orders from the CDC (they want to make sure they have the broadest definition of a "Corona case" and "Corona death" as possible).
This means a few things:
- Since decision makers aren't factoring the economy into their decisions at all, they will necessarily need to wait for cases to slow, which will take a long time because....
- Total death counts and total case counts can only rise until at least every American is confirmed to be infected or inoculated. At the time of this writing, there have been only 20M cases of ~350M citizens. We likely will need to hit at least 60 or 80M confirmed cases to start seeing cases organically slow down.
- That means we would need another another 3-4 years at the current rate of infection to start seeing the new cases slowing down. This also assumes that Corona cannot re-infect people who previously tested positive, something that's still not understood nor accepted.
- Before we hit those milestones, the stock market will necessarily have to collapse as:
- Small businesses continue to shut down and ultimately collapse - either due to SMB owners not being able to sustain their business with cash flow (due to regulations reducing sales volume) or SMB owners simply getting tired of being a sucker and closing up shop to take jobs with the companies that aren't shutting down (i.e. Facebook, Google, Amazon, Walmart, etc.)
- The Misery Index will climb or rocket up (again) and people won't be able to spend nearly as much as they used to.
- Lawmakers will print more money to counteract the rising Misery Index, hoping that it will reduce unemployment, despite increasing inflation. Printing will lose its effect on unemployment (it may have already lost this effect), and inflation will go up.
- This positive feedback loop will continue until consumers can no longer afford to buy real estate or luxuries (possibly even necessities).
- The stock market collapse mentioned in #4 will have to be drastic. The driving forces for the collapse are absolutely unstoppable at this point. Likely, a drop back to the 10k or even 5-7k region on the DOW.
- By the time decision makers pay attention, it will be an irreparable situation (if not already irreparable).
- At this point, lockdown restrictions may loosen, but we will be in such a state of turmoil and depression, business owners and investors will be facing totally new challenges. Challenges not too dissimilar to those faced during the Great Depression.
I'm not a pessimist, just trying to see the world as it is.
As a result, I evaluated where I can invest my two most valuable assets: my time and my money. Since my time investments are very particular to my own business dealings, I'll focus on my assessment of monetary investments:
Possible Monetary Investments
- Stocks - This seems like an incredibly risky bet. I believe Q1 will see a sharp rise in stocks with a huge run up within a single day or a week. This will be the bubble caused by unprecedented inflation, and the stock market flooded with even more dumb money. I believe it will pop immediately after.
- Bonds - I'm not an expert on bonds, but my understanding is that, since this scenario unfolds with a total collapse of the DOW, bonds may not be all that safe, and would be a conservative investment at best. I'd be more interested in vehicles with a higher potential return.
- Real Estate - I believe that real estate will see a crash shortly after (within 8-18 months) from the brutal crash in the stock market. Historically, IIUC, these two tend to trend together. On the macro, people won't be able to afford houses or rent, and landlords will struggle to evict because of COVID regulations thus defaulting on their mortgages as they can't service their debt.
- Angel Investing/Small Business Acquisitions - This could be very lucrative if you place the right bets on the right companies that will be able to serve the market during the upcoming depression. In the case of an acquisition, purchasing a business where you can add value immediately could be a terrific strategic move in 2021.
- Fiat currency (USD, EUR, etc.) - This is, at best, a melting ice cube. At worst, it's a house of cards. The value of these currencies go down with every printing. The collapse of the stock market will strip the world of value measured in fiat currency, particularly USD, and could cause a terrifying collapse.
- Gold/Precious Metals - Historically a great hedge against inflation, but have largely not responded to the great inflation so far. They could be lagging behind other inflation hedges, or they could have maxed out their potential as a hedge to inflation.
- Bitcoin - Currently perceived as the best hedge against inflation by major hedge fund owners and some billion-dollar CEOs. If I am analyzing correctly, the market in general as evidenced by the recent run up.
- Altcoins - Possibly even more potential as an inflation hedge, but most are largely unproven. Even ETH has not been reliably used for a dApp with mass adoption.
Based on this assessment, I'm planning to do the following:
- Increasing my position in Bitcoin during Q1, when I anticipate a short, transient dip to occur. This isn't something I take lightly, as I'd likely be putting over 90% of my total liquid assets into BTC directly. I view this as a huge risk, but I view all the other investment vehicles as far more risky.
- I'm avoiding stocks, bonds, and real estate and trying to hold only enough USD to carry on month-to-month business.
- Starting to look at angel investing/small acquisitions with lockdown- and depression-compatable business models.
What are your predictions for 2021?
If you have a differing opinion on these scenarios, I'd love to hear it – particularly if you think I'm flat out wrong on any of this logic. I'm far more interested in knowing the truth than being right here, and I understand that several people have a totally different perspective than me.
(@JScott , @James Fend and @Kak, I'm looking at you!)
Dislike ads? Become a Fastlane member:
Subscribe today and surround yourself with winners and millionaire mentors, not those broke friends who only want to drink beer and play video games. :-)
Last edited:
Membership Required: Upgrade to Expose Nearly 1,000,000 Posts
Ready to Unleash the Millionaire Entrepreneur in You?
Become a member of the Fastlane Forum, the private community founded by best-selling author and multi-millionaire entrepreneur MJ DeMarco. Since 2007, MJ DeMarco has poured his heart and soul into the Fastlane Forum, helping entrepreneurs reclaim their time, win their financial freedom, and live their best life.
With more than 39,000 posts packed with insights, strategies, and advice, you’re not just a member—you’re stepping into MJ’s inner-circle, a place where you’ll never be left alone.
Become a member and gain immediate access to...
- Active Community: Ever join a community only to find it DEAD? Not at Fastlane! As you can see from our home page, life-changing content is posted dozens of times daily.
- Exclusive Insights: Direct access to MJ DeMarco’s daily contributions and wisdom.
- Powerful Networking Opportunities: Connect with a diverse group of successful entrepreneurs who can offer mentorship, collaboration, and opportunities.
- Proven Strategies: Learn from the best in the business, with actionable advice and strategies that can accelerate your success.
"You are the average of the five people you surround yourself with the most..."
Who are you surrounding yourself with? Surround yourself with millionaire success. Join Fastlane today!
Join Today
