The REAL Real Estate Crash Is Coming… Here’s How To Prepare AND Profit
The “real estate crash” in 2008 was not a real estate crash at all.
It was a financial crisis caused by fake assets and an economy built on deals that moved assets around instead of building new ones. They created exotic and risky ﬁnancial instruments — including derivatives and credit default swaps — that produced sugar highs of immediate proﬁts but separated those taking the risks from those who would bear the consequences.
To understand what will happen in the future, you have to look at the past. R. Buckminster Fuller taught us to look at the big picture ﬁrst, then the small picture. Unfortunately, most investors start with a small picture and then go smaller.
For example, many investors wake up, check to see if their one favorite stock is up or down, then go to work. They may be an expert on, let’s say, Amazon, but often fail to see the bigger picture. One stock among thousands of stocks in a global market does not give you much information on the future. Dr. Fuller taught his students, “If you want to see the future, you must start with the biggest picture possible.”
The 125-year chart above points to the value of stepping back to see a bigger picture, a better perspective that has developed over time.
On the Dow chart, the “Giant Crash of 1929” is highlighted for a reason. If you step back, and look at the 1929 crash, and then compare that crash to the “dotcom crash” of 2000, and the “subprime crash” of 2008, you get a better perspective on why Fuller wrote Grunch of Giants, why I wrote Rich Dad Poor Dad.
The ﬁnancial booms and busts the world has been experiencing have been caused by trillions of dollars in fake money being pumped into the system by the elites.
Kicking The Can Down The Road
Did the elites ﬁx the problem? Of course not. Why ﬁx the problem when the problem makes them rich? Why change? Why do anything diﬀerently? Life is good—for the elites.
Many people blamed the “subprime real estate” buyer for the real estate crash. The reality was, the elites were manufacturing fake assets called derivatives. That was the real problem. In 2008, there were almost $700 trillion in derivatives. In 2018, derivatives were $1.2 quadrillion. That’s right, the elites made the problem bigger and it’s a quadrillion-dollar disaster waiting to happen.
The elites haven’t fixed the problem, in fact, they’ve only made it worse which means we will see these giant crashes happening over and over again.
Since the economy has been propped up by hot air since 2008, and now the economy is in the toilet again, I predict we will see another real estate crash sometime very soon.
How I made the most money in 2008
A long while back, wanting to expand my financial education, I began taking classes on options trading. For three years, I religiously studied and practiced. The instructor kept encouraging the class to be patient, telling us that it usually takes about five years to make money trading options.
One day, this hot-shot options trader came to teach. He shared with our class his track record and how much money he was making for his clients. I took the bait—hook, line, and sinker. I was tired of learning. I just wanted to give him my money and let him make me rich.
Even though I was scammed, I did finish the course and it ultimately prepared me for the crash of 2008.
Finishing the five-year options trading course gave me the insight to be on CNN in a segment with Wolf Blitzer when I called the crash of Lehman Brothers six months before the start of the 2008 depression. Instead of panicking, my partners, Kim, and I moved millions of dollars into a crashing real estate and the crashing interest rate market.
You may be thinking: How is the options trading course related to this? A down payment on real estate is an option. In this case, a call option, a bet that real estate prices would go back up. For a few million dollars, we optioned hundreds of millions of dollars of real estate in a hot market… at rock-bottom prices. When interest rates kept falling from 7.5 percent to 2.5 percent, the leverage multiplier of low real estate prices combined with low-interest rates was astronomical. My $150,000 Ponzi scheme loss turned into a priceless and lucrative life lesson.
The best lesson I gained from my options trading class was not to fear market crashes. Once I grasped that lesson, I realized I would make more money when markets crash, because markets crash faster than go up. Hence the saying: “The bull goes the stairs…and the bear goes out of the window.” For me, investing five years to study to learn to trade options was a step in securing my future. It took some time and effort, but it was a better plan than following the tired, obsolete advice to “Invest for the long term in a well-diversified portfolio of stocks, bonds, mutual funds, and ETFs.” … only to risk losing everything when the bear goes out of the window.
Prepare for bad times and you will only know good times
The last depression made my rich dad very rich and made my poor dad very poor. I am doing well today because I began preparing for bad times over 20 years ago.
Over the course of history, the actions of the rich and powerful have done both much good and much harm. I don’t fault the rich for looking out for their interests or their family’s interests. Rather than placing blame, I studied the history of the rich, learned their game, and lived my life aware of their rules of money—and created some of my own rules along the way. Most people who know the rules of the game of the rich are not in financial trouble today. For the most part, it is only those people who have low financial intelligence and live by the old rules of money who are hurting financially.
Editor, Rich Dad Poor Dad Daily