‘Asymmetric Opportunities’

‘Asymmetric Opportunities’
April 20, 2017 Admin

We here the term ‘asymmetric warfare’ quite a bit. It is similar to the term ‘4th Generation Warfare’, and refers to conflicts between sides that are vastly different in power.

The battle between Al-Qaeda and the United States was ‘asymmetric warfare’ (although a little less so now that we know the Saudi’s were backing them to such a degree), as were the Russian wars in Chechnya, and the Winter War in Finland during WWII.

I have also been hearing more about ‘asymmetric opportunities’ in the world of investing. Opportunities where some kind of market inefficiency has created a situation where the potential return far outweighs the risk of the investment.

Our good friend VivatEuropa just sent me an interview with noted investment expert Doug Casey that talks about this very thing in the context of Europe. Mr. Casey also predicts the imminent fall of the European Union.

To wit:

Doug Casey: You’re going to see other countries leaving the EU. The next one might be Italy. All of the Italian banks are truly and totally bankrupt at this point. Who’s going to kiss that and make it better? Is the rest of the European Union going to contribute hundreds of billions of dollars to make the average Italian depositor well again? I don’t think so. There’s an excellent chance that Italy is going to get rid of the euro and leave the EU.

If Marine Le Pen wins the elections, France will leave as well. That would be a smart move. She would also want to deport the migrants from Africa that are living in tent camps and cardboard boxes everywhere. Another good move. These people aren’t self-supporting, and are acting to destroy what’s left of French culture. Then again, Le Pen herself is no prize. She wants to continue the welfare state, and increase regulations and taxes. The French have zero good alternatives, at least if you care about either free minds or free markets. But that’s true everywhere in Europe. The very concept of liberty is dead in Europe.

Nick Giambruno: Why should Americans care about this?

Doug Casey: Well, just as the breakup of the Soviet Union had a good effect for both the world at large and for Americans, the breakup of the EU should be viewed in the same light. Freeing an economy anywhere increases prosperity and opportunity everywhere. And it sets a good example. So Americans ought to look forward to the breakup of the EU almost as much as the Europeans themselves. Unfortunately, most Americans are quite insular. And Europeans are so used to socialism that they have even less grasp of economics than Americans. But it’s going to happen anyway.

Nick Giambruno: What are the investment implications?

Doug Casey: Initially there’s going to be some chaos, and some inconvenience. Conventional investors don’t like wild markets, but turbulence is actually a good thing from the point of view of a speculator. It’s a question of your psychological attitude. Understanding psychology is as important as economics. They’re the two things that make the markets what they are. Volatility is actually your friend in the investment world.

People are naturally afraid of upsets. They’re afraid of any kind of crisis. This is natural. But it’s only during a crisis that you can get a real bargain. You have to look at the bright side and take a different attitude than most people have.

Nick Giambruno: If you position yourself on the right side of this thing, do you think you can profit from the collapse of the EU?

Doug Casey: Yes. Once the EU falls apart, there are going to be huge investment opportunities. People forget how cheap markets can become. I remember in the mid-1980s, there were three markets in the world in particular I was very interested in: Hong Kong, Belgium, and Spain. All three of those markets had similar characteristics. You could buy stocks in those markets for about half of book value, about three or four times earnings, and average dividend yields of their indices were 12–15%—individual stocks were sometimes much more—and of course since then, those dividends have gone way up. The stock prices have soared.

So I expect that that’s going to happen in the future. In one, several, many, or most of the world’s approximately 40 investable markets. Right now, however, we’re involved in a worldwide bubble in equities. It can go the opposite direction. People forget how cheap stocks can get.

I think we’re headed into very bad times. Chances are excellent you’re going to see tremendous bargains. People are chasing after stocks right now with 1% dividend yields and 30 times earnings, and they want to buy them. At some point in the future these stocks are going to be selling for three times earnings and they’re going to be yielding 5, maybe 10% in dividends. But at that point most people will be afraid to buy them. In fact, they won’t even want to know they exist at that point.

I’m not a believer in market timing. But, that said, I think it makes sense to hold fire when the market is anomalously high.

The chaos that’s building up right now in Europe can be a good thing—if you’re well positioned. You don’t want to go down with the sinking Titanic. You want to survive so you can get on the next boat taking you to a tropical paradise. But right now you’re entering the stormy North Atlantic.


Implications

I find Casey’s outlook reassuring, and obviously hope he is right about the future of the EU.

I also think there is something important to be taken from his words. For while he is talking about asymmetric investment opportunities, it seems to me that the exact same thing can be said about political opportunities as well.

We as Identitarians and European-Preservationists are at this point still a niche, minority movement. As crazy as that sounds, it is the case- most native Europeans (and members of the broader diaspora) are still voting for parties intent on civilizational suicide. Europe’s oligarchic power structures just exacerbate this tendency. But as a ‘revolutionary’ or metapolitical force, our best bet is to take advantage of the leverage that any potential anarchy would represent.

This happens all the time in geopolitics really. Vladimir Putin is a perfect example. In 1999, Putin was a political unknown. No one had ever heard of him. But the extreme fluidity in Russia at that time created the same asymmetric opportunities Casey is talking about above. Six months later, Boris Yeltsin- worried about potential fraud investigations that could bring him down- had ceded power to Putin, helped him invade Chechnya, and changed Russian laws to essentially install Putin into what eventually became Russia’s permanent leader.

How much good could be crammed into six months?

The Identitarian/European-Preservationist movement will likely never take power in a Western European country by traditional means at this point. While- as I wrote recently– I hope Marine le Pen wins and want to do anything I can to help that happen- I think it is highly unlikely it will, or that anything similar will take place in other Western European elections.

It is for this reason that we all often compare a complete breakdown and ‘civil war’ favorably with the current status quo. It would be horrible, but no worse than a slow twenty year crawl to Islamizaiton and enslavement. But what could be called a ‘third possibility’ is highly attractive too – that when the EU falls apart in the next several years, and times get ‘very bad’- as Casey predicted above (much like Russia in the 1990’s)- passionate, prepared, high-asabiya Identitarians have ended up perfectly positioned to take advantage, and ride that asymmetric opportunity to the top. That is the way someone like Daniel Freiburg ends up becoming President of Sweden, or the AfD deposes and arrests Merkel and takes power in Germany.

It might seem crazy to speculate on now, but as Casey states, things are about to get ‘very bad’ in the European Union, and who knows just what asymmetric opportunities may arise.

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Comments (6)

  1. Rick 3 months ago

    He’s right, during the financial crash of 2008 I made a killing (approx $100,000) buying Canadian Bank Stocks, the financial stocks got hammered but few people realized that Canadian Banks were extremely sound and had not missed or cut dividend payments in over 70 years.
    The stocks were paying 9-10% dividends at this tim and have tripled in value since then. When the time comes look for businesses with sound financials that are being caught up in the general down grading of Europe as a whole, and don’t rush in to quick when Markets drop they often keep falling for up to six months or so, sometimes it is tempting to jump ion quickly after a 10-15% devaluation but most often they will continue to erode.

    • Author
      Admin 3 months ago

      WOW. That is absolutely awesome. Well done man.

      Robert Kiyosaki always talks about how recessions benefit the rich like crazy. They hurt the poor and (especially) the middle class, but for the rich (or intelligent middle class investors on their way to being rich) its just a sale where all the best assets are on sale for half off (if not more).

      But yeah I think you are right, once the equities start to drop this round they will go way past 10-15%.

      I think real estate will correct too (especially in Vancouver and all these other Pacific Rim cities where the Chinese are dumping all their cash), but I think in the US at least the government is gonna have to start printing money like crazy to handle all the debt and liabilities, so inflation by itself should keep the real estate prices going upwards.

      Are you doing anything with real estate or just stocks/bonds/etc? Any other kinds of investments?

  2. Rick 3 months ago

    Yes, I’ve done quite a bit with Real Estate, commercial buildings are a little risky right now, if you can’t get the right tenant or if you are trying to sell you could be left sitting on them a while.
    The real goldmine is multi family buildings like small apartment buildings etc.. they are practically recession proof (actually they perform better in a recession) I live in the greater Vancouver area though and as you mentioned real estate, is crazy expensive here, trying to buy a multi tenant building for less than 3-4 million is almost impossible. Probably lots of good opportunities in the US though. If you could take on a property with a cap rate of 5% or more, you would do well. Also drop the rent slightly and self meter the utilities, and take on the strata with your own company that way even if you decide to convert and sell the units you can maintain a revenue stream.

    • Author
      Admin 3 months ago

      Very good stuff. Yes actually many parts of the US still have cap rates in the 7-8+ range, some areas still over 10. I think they will all even out a bit more now that we have all these crowdfunding sites like Realtyshares and the like though. Which is good since they’ll allow folks in Toronto/Vancouver/Seattle/San Francisco to earn a better yield than if they had to invest locally.

      I think its all bound for a correction though, when you have mortgage rates at 4-5 and cap rates at 4-5 then it ends up being not much different than buying a treasury note or something and is massively overpriced.

      But yes I think commercial is going to go belly up here soon, especially with the retail bubble bursting, but I think multifamily will be fine since the demand will stay there (or even go up in a recession like you said).

      If you have any other asset class ideas now or in the future please send them my way! I would love to start another website eventually just focused on investing and entrepreneurism. I am especially interested in more riskier/involved areas where folks can achieve really amazing returns (25-100%) through very hard work/leveraging knowledge and utilize it as a way to leave the ‘rat race’. ATM’s would be a good (non) example, as folks have in the past used them like that, although I don’t currently think they are a good investment.

  3. dbreen 3 months ago

    Probably a basic question, but what’s good currencies to leave ones savings denominated over the next 2-5 years?

    • Author
      Admin 3 months ago

      Hey DBreen, that’s a darn good question. Appreciate you asking.

      Rick may be able to answer better than me.

      I personally think Europe is going kaput, which is probably obvious given the venue we’re discussing this on lol. I also think China is going downhill though because of their demographic curve. Japan already had that same downward curve 20 years ago but it seems like they are still doing poorly.

      The US has lots of debt and underfunded liabilities, which would suggest bad things for the currency, however everywhere else on earth is worse :/

      So yeah in that respect its hard to say. I’ll defer to someone more knowledgeable.

      Great sites for research are zerohedge.com, capitalistexploits.com, richdad.com (especially the radio show), and then if you are into real estate at all check out the Bigger Pockets podcast.

      I would guess that which assets you have your capitol in would have a far bigger impact on how things go than the currency, but if you are just trying to keep a portion of your assets liquid and want it in something that won’t go down that’s tough. I guess I would just keep it in dollars but would maybe have a very small percantage in gold as a hedge to offset it, that way if the dollar goes down and gold goes up you at least hopefully come out net neutral. Any bank account you keep it is going to give you a return less than inflation anyway.

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