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Preparing for the Next Crash
Apr. 12th, 2023 08:53 amI have posted before about why a major real estate crash (primarily due to the bursting of a bubble in land prices) can be expected around 2026; I cannot be certain about dates and details. On Monday, I took some action to prepare to limit my own losses, and even profit from the crash.
Since shortly after starting my civil service job in 1998, I have been putting money into the Thrift Savings Plan, and now have over a million dollars there (this is the federal equivalent of a 401(k) plan, and I will have to pay income tax on the money when I start making withdrawals). I have put 65% of the money into stocks, and the rest into bonds; stocks have done better over time, but not around the 2007-2008 recession. Therefore, anticipating another real estate crash, I sold one tenth of my holdings in the C Fund (common stocks, reflecting the S&P 500), about 1255 shares to buy shares in the F Fund (corporate bonds), which should buy about 4182 shares. If things go as I think likely, it should be possible, in four or five years, to sell that many shares in the F Fund to buy more than 1255 shares in the C Fund.
This is not guaranteed, and I am not an investment advisor. I am reporting on this action, and I plan to report on the results, partly to illustrate that Georgist economics is not just a set of opinions about how things ought to be, but can be applied to be of practical benefit to those who understand it. Henry George used his theory of wages to provide useful advice to his friend Honest Tom Johnson, which was also useful to Johnson’s employees, and when I got a pro-land value taxation letter published in the Austin American Statesman almost forty years ago, someone who read my letter called me to discuss it. He was a Georgist, and had used Georgist ideas to make money investing in real estate.
It would be better, though, to apply Georgist remedies, so as to fix the boom-bust cycle and greatly reduce the problem of unemployment.
Since shortly after starting my civil service job in 1998, I have been putting money into the Thrift Savings Plan, and now have over a million dollars there (this is the federal equivalent of a 401(k) plan, and I will have to pay income tax on the money when I start making withdrawals). I have put 65% of the money into stocks, and the rest into bonds; stocks have done better over time, but not around the 2007-2008 recession. Therefore, anticipating another real estate crash, I sold one tenth of my holdings in the C Fund (common stocks, reflecting the S&P 500), about 1255 shares to buy shares in the F Fund (corporate bonds), which should buy about 4182 shares. If things go as I think likely, it should be possible, in four or five years, to sell that many shares in the F Fund to buy more than 1255 shares in the C Fund.
This is not guaranteed, and I am not an investment advisor. I am reporting on this action, and I plan to report on the results, partly to illustrate that Georgist economics is not just a set of opinions about how things ought to be, but can be applied to be of practical benefit to those who understand it. Henry George used his theory of wages to provide useful advice to his friend Honest Tom Johnson, which was also useful to Johnson’s employees, and when I got a pro-land value taxation letter published in the Austin American Statesman almost forty years ago, someone who read my letter called me to discuss it. He was a Georgist, and had used Georgist ideas to make money investing in real estate.
It would be better, though, to apply Georgist remedies, so as to fix the boom-bust cycle and greatly reduce the problem of unemployment.
