Register

Peak Oil is You


Donate Bitcoins ;-) or Paypal :-)


Page added on August 23, 2017

Bookmark and Share

Better A Year Early Than A Day Too Late

General Ideas

He who hesitates is lost.

~proverb

Change, especially a collapse scenario, often happens quite fast. So fast that there’s little to no time to react in the short frenzy between “before” and “after”.

This is true throughout nature. Glaciers that took millennia to form calve off into the sea in a matter of moments. Old-growth forests filled with thousand-year-old trees can be decimated by a single wildfire. The bubonic plague “Black Death” pandemic of the Middle Ages killed one-third of the Earth’s human population over just four short years.

Fast change is also a hallmark of human society. Movements and ideas — oftentimes simmering for years, decades or longer — suddenly reach a critical state in which the populace is swept up into history-making action. The outbreak of World War I. The Civil Rights movement. The dissolution of the USSR. The Digital Age.

When it comes, change happens swiftly. And life after — for better or worse — is forever different.

I’ve witnessed this time and time again since co-founding PeakProsperity.com. And in pretty much every instance, I notice that the vast majority of people — including even many of the the watchful and preparation-minded folks who read this site — are caught by surprise.

Fukushima

A good example of this was the disaster at the Fukushima Daiichi nuclear power plant in March of 2011. Of course, no one could have foretold the timing and scale of the tsunami, and virtually nobody expected that it could overwhelm the facility as spectacularly as it did. So in the immediate aftermath of the plant’s failure, the world looked on in sympathy, not fear.

But on March 12th, that changed as the first of several hydrogen explosions was observed among the reactors. And then my phone rang.

It was Chris, my co-founder here at PeakProsperity.com. “I don’t know exactly what that was, but it wasn’t good”, he said. Based on his background in the sciences, his strong assessment was that the situation at the plant was much more serious than was being publicly admitted to.

Since I live on the west coast here in the US, he advised me to consider getting a radiation detection/contamination protection kit — “just in case”. While we both hoped it wouldn’t come to that, I quickly heeded the advice. I placed an order for a kit as well as a shipment of iodine tablets.

I was very lucky to have done so. Because just a few short hours later, as the world woke up to the worsening situation at Fukushima, anything related to radioactive contamination was sold out across the US. For months. The supply chain for that stuff was miniscule compared to the demand of a panicked nation.

If you were late to game — and pretty much EVERYBODY but the extreme early-birds like me was — you were out of luck. And vulnerable.

Now, thankfully, as horrible as the on-going crisis there still is (it’s five years later and the radioactive fuel that melted through containment still remains in a molten state), the worst-case scenario didn’t materialize.

But I still keep my contamination kit handy. More than anything else as a reminder of how fast things can change. And of the outsized value of early action.

Oroville Dam

More recently, we saw a similarly swift devolution of events at California’s Oroville Dam this year. The west coast had suffered an especially wet winter, and an arrival of a Pineapple Express in February didn’t help the situation.

California residents were focused on flooding and mudslides in the usual places — no one had any inkling that there was risk of larger infrastructure failures, let alone one at the tallest dam in the US. And, as the water levels rose at the Oroville Dam, the communication from state authorities was “All is fine. All is under control. There’s nothing to worry about” — until suddenly a mass evacuation of over 200,000 residents living downstream was ordered.

Not surprisingly, the subsequent panicked scramble resulted in tremendous traffic jams, slowing down the evacuation to a snail’s pace. Residents had no time to prepare, buy supplies (if there were enough in their area to purchase), or line up a safe destination they could head for. They just had to grab what they could and flee as best they were able.

Again, everything appeared fine right up until the tipping point. Those with the foresight beforehand to pack a to-go bag, arrange a bug-out crash pad — or better yet — leave for a safer location until the waters stopped rising, fared much better than the herd who waited.

2008 Financial Crisis

On a more economic note, I’ve pointed out in a number of past articles how quickly things went south during the 2008 financial crisis. Even pundits like Chris and I, who warned for years it was very likely coming, were still shocked by how viciously it struck.

Most folks have preferred to forget how quickly the bubble popped. Between September and October, the S&P 500 lost one-third of its value. Poof!

Of course, the S&P then continued falling through March, ending at over 50% lower than its pre-crisis high. Millions of jobs were lost over these months. And the prices of other major assets from houses to bonds were savaged, too.

It all happened so quickly that most investors and homeowners were simply overwhelmed by the shock. Unsure what to do, they simply watched the price of their assets continue to fall — praying for the carnage to end.

Timing Isn’t Everything. Positioning Is.

They say that Timing is everything. I disagree.

Trying to time disruptive events is a fool’s errand. In the years I’ve been involved in running this business, I’ve seen too many people make big bets (portfolio allocation, geographic relocation, job change, etc) because they were rock-solidly convinced a major change event was ‘imminent’. Most of those folks eventually regretted the cost of their haste as the status quo muddled on much longer than they’d expected.

Anyone who predicts with exactitude about the when of future events is deluding either you or themselves. More likely, both.

BUT, we can predict the what (i.e., what will happen) with much greater precision. And that’s where advantage can be gained.

For instance, many of those paying attention in the years leading up to 2008 had arrived at the conclusion that bad policies and overly-loose lending standards had resulted in mal-investment on such a grand scale that a massive clearing event was inevitable. Did they know the date of the tipping point? No. But they knew the probability for a major financial crisis increased with each year.

Those who positioned themselves — prudently — in advance avoided the losses that everyone else took. As The Big Short detailed, some were even able to profit wildly from their foresight (though admittedly, this was just a rarified few).

The adjective “prudently” is important here, because here at PeakProsperity.com we emphasize risk management, not speculation. Our goal is to maximize our odds for prospering no matter which future outcome arrives. Yes, the intent is to enjoy the best (risk-adjusted) return in building our wealth as possible. But it’s important to understand that sometimes ‘prospering’ simply means losing less than we would have otherwise, should events go against our expectations.

So for those looking to protect and growth their wealth, our advice is to focus on the positioning for highly-predictable events rather than their timing.

This is the same logic underlying an insurance policy. Illness/injury, car accidents, house fires — the timing of these, if they happen at all, is unknowable. But should they happen, insurance only has value to you if you procured it in advance.

The exact same is true across the spectrum of the Eight Forms Of Capital (for those unfamiliar with this framework, it’s the guidance we offer for building “true wealth” in life). Don’t wait to invest in your health until you’ve developed a chronic condition. Don’t put off building community before a crisis (injury, job loss, etc) forces you to ask for help from others. Don’t forget about creating an emergency kit until some disaster (hurricane, earthquake, flood, etc) hits.

For those who put off taking advance action, it may be simply “too late” in a number of scenarios should the status quo quickly change.

Don’t be an ‘avoidable victim’. For the events you calculate are likely to happen, assess your current level of preparedness and take steps now to shore up any deficiencies. As you do this, ask yourself: What would I absolutely regret not having in place should this happen tomorrow? Make that list your top priority.

To help you in this, we have a self-assessment form, which you can download for free here. We use it at our annual seminar each year, so it’s pretty well-honed at this point.

After taking it, some folks prefer to go a step further and schedule a consultation with Chris to discuss their personal situation and get his experienced perspective on their plans as they take shape. If interested, you can learn more about how to do that here.

But the main focus here is to prioritize the key steps to take in advance of any potential life-altering events that concern you.

For example, anyone who reads PeakProsperity.com should know that Chris and I think a major market correction is long overdue. We anticipate price drops of a similar magnitude as seen during the 2008 crisis, and possibly even worse. (For those new to this site, read: The Mother Of All Financial Bubbles)

If you share our conclusion, are you positioned prudently should the market correction arrive tomorrow?

Remember that in 2008, most people didn’t expect the market to fall. Folks believed: It’s different this time. Yet when the market started tanking in September, it happened so quickly that investors had already lost a third of their portfolio’s value by the time their October statements arrived in the mail. At that point, most were psychologically unprepared, and simply held on, praying that the market would go back up. And still prices kept falling for months after.

Don’t let this happen to you. Determine what your minimum acceptable positioning should be and then make sure it’s in place. Even if it’s as simple as just holding more of your investment portfolio in boring old cash. (Feel free to read our How To Hedge Against A Market Correction guide for additional ideas). I myself just updated readers on how I recently increased my short positions within my portfolio.

Yet it still surprises me how many people I talk with regularly who agree the risk of a market correction is uncomfortably high, but have not yet begun to position themselves accordingly.

For example, a large number of folks have had free consultations with our endorsed financial advisor since the start of 2017, each very concerned to protect their financial wealth should a market correction happen. Many indeed plan to open accounts, but haven’t yet — remaining invested in their existing long positions for the time being. Why? Because they’ve been making money over the past several years, and can’t yet wean themselves off of the central bank gravy train even though their brains tell them it will inevitably come to an abrupt and painful end.

If you’re one of these folks, please reflect for a moment. No one can predict when the next market downturn will happen. By the time it does, your capital needs to have already been positioned smartly in advance. It will do you a lot less good to try to sell after taking an initial round of losses. And at that point, emotionally, you might find yourself too shell-shocked to take action. There might even be restrictions placed on access to your funds if the situation gets bad enough. So is today’s urge to wait ‘just a little bit longer’ worth the risk?

Only you can determine if and when to transfer any of your capital over. But if you’ve already made the decision in your mind to eventually do so (as many of you have expressed), then a prudent step is to simply fill out the paperwork to open an account now. You can deal with any transfers later. Doing this is a small investment of your energy in the here and now, but will save you valuable time, stress and potential uncertainty should you decide to move your money there urgently in the future. So whether you plan to work with our endorsed adviser or another one you like even better, remove as much ‘friction’ as you can today that could threaten to derail your goals for tomorrow.

The same logic applies to nearly anyone concerned by the Three E’s discussed in The Crash Course:

  • Homeowners looking to sell before the next housing downturn — With more and more major markets topping out, have you determined a time frame by which you’d like to have your house sold? Have you identified the broker/agent you’d like to use? Have you calculated your desired listing price?
  • Account holders at Too Big To Fail banks — If you’re planning on eventually moving your cash to an alternative provider with less exposure to derivative risk or the potential for a “bail-in”, have you identified the specific credit union/savings bank/private vault/etc yet? Have you conducted a test transfer yet?
  • Those considering buying cryptocurrency for the first time — Have you learned how to purchase them yet? Which coin(s) do you want to buy? Are you going to use an exchange? Which one? How do you plan to store your coins? Have you lined up that solution yet?
  • Those switching to a de-growth lifestyle — Where do you want to live? What will your homestead needs be? Will you keep your current job or need to re-skill? Will your new lifestyle depend more on others? If these answers require any life changes, have you made any of them yet?
  • And on and on…

In all of these cases, the benefits of taking action on the essential steps today, in advance of a future date by which you may desperately want those steps to have been taken, are clear.

Most folks just need a little nudge or inspiration to get started. Consider this your call to action. For those who haven’t thoroughly utilized them yet, our free What Should I Do? Guide, as well as our book Prosper!: How to Prepare for the Future and Create a World Worth Inheriting are chock full of our best guidance and recommendations.

As Chris has often said about preparing for events that have large downside risks: It’s much better to be a year early than a day late.

Very wise words.

What would you regret most being a day late on? Whatever your answer, focus your attention there — today.

PeakProsperity.com



13 Comments on "Better A Year Early Than A Day Too Late"

  1. onlooker on Wed, 23rd Aug 2017 6:22 am 

    Yes, it makes much sense what is written here. My father was very cautious and prudent and liked to make sure of things. So I have become similar to him. When one can increase the probability of avoiding mishap or harm, one should especially if the cost of preparing is relatively minor in comparison to the cost of the potential harm or mishap. I would make an analogy with climate change. We should have as a species being preparing for a worse case scenario as the costs of preparing while high are miniscule compared to dealing with the potential catastrophes on the horizon. In fact, we are already seeing that in for example homes being destroyed which are built near shorelines. People should have sold those homes already not so much to accrue a large windfall gain but to avoid catastropic loss.

  2. Davy on Wed, 23rd Aug 2017 7:22 am 

    I am not sure any more about economic doom. It used to be part of my 3-5 year doom coupled with peak oil dynamics that a few years ago appeared to be compressing into trouble territory. Now the world is in effect a managed Ponzi with nowhere to run or hide. Whatever it takes in the moral hazard of extend and pretend is a de facto policy tool. The age old “honesty” price discovery is no longer a chief tool. Now it is elevated and frothy markets driven by artificial yield and liquidity driven by talk not sound economics.

    Sooner or later something will break. The unmitigated effects of malinvestment, like peak oil, never sleep. Bad debt must be accommodated with more liquidity. If it is not recognized it compounds. Recessions cleans in economics but in our new economics recessions are no more. The reason they are no more is they could be our end now that we have so much debt and unfunded liabilities. Safety nets are now overextended. Easing cannot let up for normalization or zombie firms would go bust. China and Europe have a huge amount of zombie firms and the US Gov is one big debt zombie. These are too big to fail power centers so they won’t be allowed to fail until they fail.

    All Ponzi arrangements fail. In a finite world all bubbles pop. This will include the human bubble of overpopulation in consumption overshoot. The million dollar question is when. I don’t even watch the markets anymore. For a time I was watching them for a correction or worse. People still do and try to find similarities with past markets and economic cycles. The existential conditions are different now. During the 20th century all the ingredients were there for huge growth impulse. Populations growing with fossil fuels combined with techno advances. This culminated with the digital revolution. New tech advances are over, populations are reaching a danger point, and peak oil dynamics is ravaging our fossil fuel complex. Show me the new discoveries and please spare me the noise there is so much liquid fossil fuel resources out there. What you can’t crow about is affordable liquid fuels. Affordability is in decline.

    The economy is near thresholds levels that could break. Laws of the minimums are popping up everywhere for example vital resources like water. The planetary system is in extreme decline and localized micro failures. We have places with fauna and animal life is disappearing. In many cases people depend on these resources. Climate is destabilizing. This does not directly influence the economy. These are still mostly indirect effects. Substitution is still possible. It may not be profitable substitution but we can still adapt often economically to our predicaments in a slow decline. What is being stretched is the social fabric. Wealth transfer is hollowing out the productive sector with a parasitic financial and leadership command and control. Just like in previous civilizations the rich and elite are bleeding the productive base.

    We are back to that million dollar question when? I would not even add the clarification of where because if this starts in China where the worst financial dislocations are it will quickly spread to Europe and the US. The EM world is just a tail being wagged. The when is one of those unknowns that are potentially tomorrow? It is based on systematic rigidities with unknown weak point thresholds. For example how much debt can be created then extended and pretended? What is the human nature component to future economic crisis? We can’t use past experience anymore in these regards. We know from past experiences these are bad conditions to be in. We know what the bad and good is but not how they now fit into the new normal.

    Nothing is as it was yet we are still living a slow boil status quo that feels like it albeit in the surreal. We just don’t notice fully the creeping inflation for some things. We don’t see fully the real demand destruction going on in the real economy. There is still plenty of malinvestment and financialization to hide the true state of the global economy in decline. The one bright spot is the renewable revolution. It is likely not enough and too late. It is fake green and fake on the horsepower needed to run a modern society. It will help just like other techno efforts. We will make advances here and there that help keep us going in the arena of energy but broad based energy decline is in the works. This energy decline is likely not enough now to throw the economy but its damaging effects are at work.

    What will likely throw the economy is convergence and mixing of events and conditions beyond the control of central banks. Confidence at some point will be breached and dysfunction and economic abandonment will drive economic activity dangerously lower in a just-in-time world of economies of scale facilitated by a confidence based financialization. If people get scared they will not invest. Activity falls and before you know it goods, parts, and services stop in a classic “Minsky” process. Maybe we have 10-20 years, 3-5 years, or tomorrow. I don’t know anymore. I do know if there is a war of any size that will be a very likely tomorrow scenario. The economy is in our hands. It is a train wreck in the making and there is nothing we can do about it. We re late term civilization and our end is over there somewhere.

  3. baha on Wed, 23rd Aug 2017 7:51 am 

    I have read PP for years. It makes since. I paid off my house, grow and preserve my own food, and make my own power. Right now most of my IRA is in cash except for a wild bet on Tesla. I am prepared to ride the coming changes and bend instead of break.

  4. baha on Wed, 23rd Aug 2017 8:04 am 

    That’s kind of the point…my houses value my go down in $$$, but it value to me doesn’t change.

  5. Makati1 on Wed, 23rd Aug 2017 6:57 pm 

    “News” in America today:

    “United Nations Issues Rare “Early Warning” – Signals Potential Civil Conflict In America”
    “Massive PBGC Rate Hikes Force Corporate Debt Binge As Companies Try To Pay Down Pensions”
    “They’re Using Bernie Madoff Math To Hide A Crisis”
    “Autos Expose Economy’s Fragility As Credit-Compelled Car Sales Continue To Collapse”
    “”Winter Is Here” For Housing – Whalen Warns “The Crowd Of Buyers Is Thinning””
    “Compass Point: “Odds Of A Government Shutdown Are Now Dramatically Higher””
    “ESPN Pulls Asian Announcer Named Robert Lee To Avoid A Mass Triggering Event”
    “Chief Of Naval Operations “Looking Into” Possibility Ships Were Hacked” Them damn Ruskis! LOL
    “Pentagon Denounces American Nazis While Arming Ukrainian Nazis” The Nazi problem is coming home.
    “The Imperial Collapse Clock Ticks Closer To Midnight”
    “US companies spent $4T buying back their own stock” Bubble blowing…
    “US Gross National Debt to Spike by $800 Billion in October?”
    “TSA facial biometric body scanners and government watchlists being used in train stations” Police state.
    “Opioid Use Now Tops Tobacco Use in the U.S.”
    “The Wipeout of Middle-Class America is Next”
    “63 Shot, 8 Dead In Chicago’s 2nd Most Violent Weekend Of 2017”

    Is the ANY positive news about America?

  6. paulo1 on Thu, 24th Aug 2017 8:00 am 

    Great comments all. Very thoughtful. I am from a family of 4 siblings. My brother and I are in a similar situation to Baha and Davy…I guess at the details, but it sounds pretty close. My sister, when she gets upset at the news and lately it is Trump etc, books a trip; Maui in the winter and right now she is probably having supper in Hungary. Are they wealthy? No, but that is how they choose to spend their savings. My eldest brother is the grasshopper and has even run out of people to ask for money.

    Who is right? I don’t know anymore and keep my judgements to myself. However, if we make concious decisions based on values and awareness, that is about the best we can do. Plus, enjoy the journey as each day unfolds.

    My woodsheds and freezers are very full:-)

    The older I get the less I understand about what is supposedly the situation. I thought this puppy would have crashed awhile back. I cannot believe the current debt levels of indiviuals and countries. Oh well, we’ll just continue on.

    regards to you folks

  7. GregT on Thu, 24th Aug 2017 12:09 pm 

    “I would not even add the clarification of where because if this starts in China where the worst financial dislocations are it will quickly spread to Europe and the US.”

    Now that’s funny Davy. It already did start, in the U.S., and quickly spread throughout financial institutions and economies globally. I would add that a very big part of that problem to begin with, was initialized by the offshoring of US jobs by U.S. multinational corporations, mainly to China. Something that even Trump based his platform on in his promise to return American jobs to American workers, in order to ‘Make America Great Again’.

    Of course there was also the underlying catalyst of rapidly rising energy costs, without which, the game likely would have lasted a while longer.

    The world has not recovered from the resulting ‘Global Financial Crisis’, and will not, ever. Faced with mountains of exponentially growing debt, historically low interest rates, poor employment prospects for the underclasses, both financial and housing market bubbles of epic proportions, and marginal energy costs that are too costly for substantial economic growth and too low for producers to turn a profit, there is no turning back.

    It is now a confidence game, and nothing more. The first cry of fire, and everybody will be running for the exit doors, even though the building has already burned to the ground.

  8. Davy on Thu, 24th Aug 2017 12:25 pm 

    Grehg, that is old regurgitated news. Fast forward, I know it is hard for an anti-American Asiaphile to understand global finance when it conflicts with your narrow agenda. It is all interconnected grehg so stop your whining. We are all to blame. Even the Butthole of the Continent is part of it through its money laundering. You know all about that don’t you. Good try but try again.

  9. GregT on Thu, 24th Aug 2017 12:33 pm 

    Davy,

    If you have a reasoned, considerate rebuttal, by all means, please comment. Otherwise, keep your usual name calling and immature rhetoric to yourself.

  10. CAM on Thu, 24th Aug 2017 12:36 pm 

    This is an investment pitch if I ever saw one. But the coming discontinuity will not be kind to any but an exceedingly small type of investments. As with real estate, the three most important considerations are;

    1. Location
    2. Location
    3. Location

    For the coming discontinuity the three most important considerations are;

    1. Food & Water
    2. Food & Water
    3. Food & Water

  11. GregT on Thu, 24th Aug 2017 12:41 pm 

    And Davy,

    The Vancouver housing market bubble was not of my making, and I completely disagree with the policies that allowed it to happen in the first place. Not taking advantage of it however, would have been stupid on my part. I will add, the house that we sold two years ago has increased in price by close to a half a million dollars since then. I haven’t lost a wink of sleep over that, and I’m glad we got out when we did.

  12. Davy on Thu, 24th Aug 2017 2:36 pm 

    So the US not taking adavantage of its beneficial aspects is different mr double standards. We are all to blame including you. grehg, I will treat you nice if you be nice to boat. Lol. Mr hipocritical. Better yet just don’t talk to me. Then there is no issues with nice or mean.

  13. GregT on Thu, 24th Aug 2017 3:04 pm 

    The U.S. Is not taking advantage of anything Davy. The U.S. is in financial ruin. It is the corporations that have taken advantage of everyone, including U.S. citizens, and to the advantage of the political minions that have/are allowing that to happen.

    I was among the first to speak out against globalization Davy. And an FYI, my career was in the financial sector.

Leave a Reply

Your email address will not be published. Required fields are marked *