just in case be safe

i hate to toot my own horn, but i have no choice but to brag about my past successes in investment so that my dear friends and family will listen to my advice and avert POTENTIAL pain and hardship.

in 2007, i noticed the supposedly low income folks i play basketball and golf with in the US were able to buy 2 to 3 houses even if they had poor credit history. i felt it was not sustainable and had a gut feeling the market was going to crash. i went to 50% cash just to be safe. i did not go to 100% cash because non of the financial experts i followed were warning of potential market crash. who am i to go against the wisdom of the experts? 

i went to 50% cash so that in case the experts are correct, i won't miss any upside, and in case i am correct, i can take take advantage and do some bottom fishing. as it turned out, i was correct and the market crashed in 2008. when the market started to recover, i started buying stocks and properties at dirt cheap prices and made a killing. meanwhile, many of my dear friends went into severe pain and depression. one even bought a gun because he was planning to commit suicide. good thing he realized his wife was a dentist and they will always be ok. 

MGM grand resorts had the best financial advisers and economists, yet their experts advised them to go into a giant development project in las vegas right before the crash. their stock went from around $100 to $2 overnight. OUCH !!! 

right now, in the philippines, i feel there could be an economic downturn or recession for 2 reasons:

1) glut/overbuilding of condos

corabes towers near my house in gemsville subdivision just got taken over by the bank because the developer and owner were not able to sell enough units to cover the loan. meanwhile, in the past 2 years i was not able to find a renter for any of my properties. i had to resort to renting them through airbnb at dirt cheap prices just to cover the condo dues. if i attempt to generate income by raising the listing price even just a little bit, nobody would book and i end up losing money. the 4 riala towers in cebu IT park are almost empty. it's like a ghost town despite IT park being a premier location.

the glut of condominiums have been going on for quite a while. however, i refrained from sounding the alarm because i know banks in the philippines have much stricter lending standards. also, many condo buyers are foreigners with lots of cash. the reason i'm sounding the alarm now is due to the following reason: 

 

2) AI could replace many of the call center jobs

i'm not sure if AI will even affect the philippine economy. it's advantages might even benefit the philippines and become a NET POSITIVE for our economy. the only thing i'm sure of is that no human on this earth is smart enough to predict these things. it's too complicated. but it's better to be safe than sorry. john paulson, the person the movie "the big short" is based upon, predicted the crash of 2008. but turns out he just got lucky because he lost so much money investing in gold after that.

as i keep preaching in my blog, do not try to be a hero and predict the market. just stay safe by being diversified across currencies and asset classes. keep enough dry gun powder (cash) so you can pull the trigger during market downturns. 

my advice is to open a dollar acount and put at least 25% of your net worth in dollar. if you can buy US treasuries, the short terms right now have a whopping 5% yield !!! the 2 year is yielding 4%. if you are not liquid, the bad news is it's almost impossible to sell any property right now at market price. if you are lucky enough to get any offer, even if it's PAINFULLY below the market price, just take the pain and take the offer so that just in case there is an economic downturn in the philippines, you can still smile and sleep soundly at night.

(for more of my knowledge bombs, click the "ian's knowledge bombs" banner at the top of this article and choose any article in the table of contents that piques your interest)