Advice for Rich: Insure yourself against war...

[mbt2001]

I thought that this was an interesting peice. In any event, I wonder if this is not the kind of "insider advice" that we all would do well to heed.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aImBVle3OMyo

Biggs's Tips for Rich: Expect War, Study Blitz, Mind Markets

Review by James Pressley

Jan. 30 (Bloomberg) -- Barton Biggs has some offbeat advice for the rich: Insure yourself against war and disaster by buying a remote farm or ranch and stocking it with ``seed, fertilizer, canned food, wine, medicine, clothes, etc.''

The ``etc.'' must mean guns.

``A few rounds over the approaching brigands' heads would probably be a compelling persuader that there are easier farms to pillage,'' he writes in his new book, ``Wealth, War and Wisdom.''

Biggs is no paranoid survivalist. He was chief global strategist at Morgan Stanley before leaving in 2003 to form hedge fund Traxis Partners. He doesn't lock and load until the last page of this smart look at how World War II warped share prices, gutted wealth and remains a warning to investors. His message: Listen to markets, learn from history and prepare for the worst.

``Wealth, War and Wisdom'' fills a void. Library shelves are packed with volumes on World War II. The history of stock markets also has been ably recorded, notably in Robert Sobel's ``The Big Board.'' Yet how many books track the intersection of the two?

The ``wisdom'' in the alliterative title refers to the spooky way markets can foreshadow the future. Biggs became fascinated with this phenomenon after discovering by chance that equity markets sensed major turning points in the war.

The British stock market bottomed out in late June 1940 and started rising again before the truly grim days of the Battle of Britain in July to October, when the Germans were splintering London with bombs and preparing to invade the U.K.

`Epic Bottom'

The Dow Jones Industrial Average plumbed ``an epic bottom'' in late April and early May of 1942, then began climbing well before the U.S. victory in the Battle of Midway in June turned the tide against the Japanese.

Berlin shares ``peaked at the high-water mark of the German attack on Russia just before the advance German patrols actually saw the spires of Moscow in early December of 1941.''

``Those were the three great momentum changes of World War II -- although at the time, no one except the stock markets recognized them as such.''

Biggs isn't suggesting that Mr. Market is infallible: He can get ``panicky and crazy in the heat of the moment,'' he says. Over the long haul, though, markets display what James Surowiecki calls ``the wisdom of crowds.''

Like giant voting machines, they aggregate the judgments of individuals acting independently into a collective assessment. Biggs stress-tests this theory against events that shook nations from the Depression through the Korean War, which he calls ``the last battle of World War II.''

Refresher Course

Biggs has read widely and thought deeply. He has a pleasing conversational style, an eye for memorable anecdotes and a weakness for Winston Churchill's quips. His book works as a brisk refresher course.

What really packs a wallop, though, is his combination of military history, market action, maps and charts. It's one thing to say that the London market scraped bottom before the Battle of Britain. It's another to show it.

In May and June 1940, some 338,000 British and French troops had been evacuated from Dunkirk by a flotilla of fishing boats, tugs, barges, yachts and river steamers. The French and Belgian armies had collapsed; the Dutch had surrendered. Britain stood alone, as bombs shattered London and the Nazis prepared to invade. Yet stocks rallied.

Mankind endures ``an episode of great wealth destruction'' at least once every century, Biggs reminds us. So the wealthy should prepare to ride out a disaster, be it a tsunami, a market meltdown or Islamic terrorists with a dirty bomb.

The rich get complacent, assuming they will have time ``to extricate themselves and their wealth'' when trouble comes, Biggs says. The rich are mistaken, as the Holocaust proves.

``Events move much faster than anyone expects,'' he says, ``and the barbarians are on top of you before you can escape.''

``Wealth, War and Wisdom'' is from Wiley (358 pages, $29.95, 15.99 pounds).

(James Pressley writes for Bloomberg News. The opinions expressed are his own.)

To contact the writer of this review: James Pressley in Brussels at [email protected] .

Makes you wonder, that is for sure.

 

[JWarren]

Let me get this straight....

Bloomberg has a piece promoting SHTF preperation????


Over my years as a stockbroker, I have always seen Bloomberg as a "just the facts" service as opposed to CNBC and such. This speaks volumes to me-- unless there has been a shift towards the dramatic at Bloomberg recently.

-- John

 

[mbt2001]

My thoughts exactly JW...

 

[rero360]

interesting piece, I've just recently started investing myself, mutual funds and roth ira, as far as I'm concerned I invest what I can and once the money is invested it no longer exists. All of it is earmarked for retirement so until i get up there in age it simple doesn't exist, looking at it that way will keep the urge to take money out for various stuff to a minumum.

I probably should have invested more last year, but the urge to buy guns and reloading stuff was too great. oh well, 21 thousand is good for a years worth of investment.

 

[strat81]

While I agree with the overall point of the article, I think it will fall on deaf ears. And even if people do listen, listening and following-through are two different things.

The truly wealthy do often have more than one residence. Even middle and upper middle class folks may have a country home, house in the mountains, a cabin up north, or whatever you want to call it.

The suggestion for seed, fertilizer, etc is good, but without the necessary skills, an excursion like that will be short lived. I can't speak for everyone (rich, poor, or otherwise), but I have enough trouble getting grass to grow, forget about farming. I think many folks wouldn't know what to do, regardless of SHTF.

Maybe I should work on my ag skills. Maybe not on the tractor and combine level, but vegetable garden skills couldn't hurt.

 

[DMK]

Maybe I should work on my ag skills. Maybe not on the tractor and combine level, but vegetable garden skills couldn't hurt.

I have family that lived through the great depression and WWII. A decent vegetable garden can go a long way in separating "barely making by" from "starving to death". I don't know anyone who lived though those periods who didn't keep some sort of garden most of their lives. Even my family that lived in NY city figured out a way to grow things on the roof or in a fire escape during hard times.

 

[sojournerhome]

Good Post

Don't jump to the conclusion that Bloomberg is supporting SHTF.
They are looking at the facts historically, that so many have not
looked at objectively.

Look at our elections, it's always what is in my pcoketbook for
people to decide who to vote for. Very subjective. Obama's smile
and charisma are very subjective. But as a whole people aren't
looking at the facts. Just at the present and maybe 2-3 paychecks
ahead.

I will have to take a look at this book.

Thanks.

 

[iiibdsiil]

I'm not Rich, I'm Brett, but I'll consider the advice.

 

[MarshallDodge]

So will the rich be hiring those that know how to use a gun, have access to guns, and the ammo to feed them?

I heard a statistic recently that 70% of US households live paycheck to paycheck. If this is the case, there are going to be a lot of people that will be in trouble if something bad happens. The government will be trying to offer aid in the form of welfare but where is that money going to come from? The rich?

This country is only as good as the people that live in it and run it. I'm hoping that in a time of crisis we can all band together to survive. I also hope that I would never have to shoot a starving person to protect my property.

 

[mbt2001]

Just from a philosophical perspective, I read the book, Lucifer's Hammer, kind of like Alas Babylon, except Lucifer's Hammer sucked... IN any event, the comment might hit Earth and people's reaction where a surprising mix of not caring and "wanting" the world to end. The ones who didn't were the ones who had the most to lose, ie the Rich folks.

Do you think an African tribesman cares if the SHTF? No, because it wouldn't change his life at all. Our life would change, but we would also not have debt and creditors and all the other negatives. The Rich, who have POSITIVES in that area and whose negatives are their personal and family life would of course have something to lose...

The interesting part of the post is the timing, thesis and advice. Timing, just after a market contraction that may get a lot worse. Thesis, the market acts and an indicator for big events, downturns can be harbinger of disaster, the market is a “oracle”, in a sense. Advice, Rich people, secure yourselves by buying farms and stockpiling equipment…

Sometimes you wonder… Example, recession fears lead people to watch spending, the lack of spending leads to a recession, people further cut which leads to a deeper recession and loss of jobs which spirals us into a depression… Now what came first, the Chicken or the Egg? That is kind of what I am wondering about this book…

 

[iiibdsiil]

Sometimes you wonder… Example, recession fears lead people to watch spending, the lack of spending leads to a recession, people further cut which leads to a deeper recession and loss of jobs which spirals us into a depression… No what came first, the Chicken or the Egg? That is kind of what I am wondering about this book…

I've always wondered what would happen if we didn't know that we were in a recession. Like you said, I think it makes it worse.

The same with the elections. Take the reporting out of it, don't let us know what's going on with the primaries, just tell us in the end who won each side. People would vote for who they want to vote for instead of saying "Ah man, my guy isn't going to win anyways, and I really don't want this other guy in there, so I'll vote for the third guy."

 

[Neo-Luddite]

I'm imagining a SHTF scenario with Mr. Howell and Lovey and an aweful joke about a 'loaded' Martini.

A few rounds over the approaching brigands' heads would probably be a compelling persuader that there are easier farms to pillage.

Not when the 'brigands' are trained and shoot back to further their own ends, nefarious or not.

This book sounds like it is advising people to stock their little disaster hideaway. I wonder if it offers advice on training?

Oh well, pack extra wine and pills and the end may be less painful when the Mountain House runs out.

 

[Lucky]

Grain can last a good while. My parents and grandparents sometimes had previous years' in the graineries for a couple years before deciding to sell it. Stored in fancy high-tech ways would probably be even better. And vegetable seeds, definitely. But most people have little idea the investment of hours and labour it takes to grow a decent plot.

What I get from the article is a sort of return to feudalism, by default. The rich might not plan to be royals, but they have land to be tilled and there are hungry people who are willing to work it. Naturally the parties will get together and work out an arrangement, and there's nothing wrong with that.

Even the thought of having to defend your land from the pillagers, rings historical.

Think about it, Prince Nugent.

 

[IndianaBoy]

Why would anyone buy land to prepare for a SHTF situation?


If things get that bad, the guy on top of the hill with lots of guns and ammunition is going to own all the land within his effective range.

People will jealously and violently guard foodstuffs and hunting land.

It would be interesting to see what would happen if it weren't such a departure from the comfortable lives we lead.

 

[30 cal slob]

2 decidedly negative reviews and one ok review on amazon.bomb.

 

[Lucky]

Indianaboy, what if society doesn't collapse but merely change a lot? If it's like Atlas Shrugged or some post-nuclear war scenario, you can maybe assume all long distance communications are down. But everyone will still speak English, and they'll likely come together as a community. Property rights just might take a bit higher precedence too.

I think people will jealously guard foodstuffs and land, and the best way to do that is through absolutely respecting the rights of others. If it's OK for you to take another's land, then it's OK for others to take yours. And there will always be someone or group strong enough to do it. But if you act as a community it'd be near impossible to push them all around.

People trying to take other people's land may find squatter's rights to be unappreciated, and justice could be based on expedience.

Imagine a courtroom consisting of people from a community. You tried to muscle in and take over someone's farm. You're now on trial. They don't want to feed you for umpteen years, and you basically are a threat to their lives if you're free. What do you expect they'll do with you?

If they hang you up out front, then the next guy or group of guys with guns but no luck may think twice about trying to take, and offer to work instead.

 

[stephpd]

rich

Lacking skills in hunting and farming will just make that fancy house in the country easy pickin's.Sure shoot over my head, I'll be aiming center mass. The rich have no idea how to live off the land. And hard work(farming and hunting) is beneath them. They won't survive, don't know how.

 

[ScottD]

Stephpd, do NOT post about what you do NOT know about. MANY rich people, myself included, grew up poor and learned how to live off the land. And we also learned how to live off the economy which made us rich. And being rich, I get to shoot a LOT more than most people and am more than familiar and deadly accurate with a wide variety of firearms. In fact, I make it a point to take several professional courses a year...just got back from Gunsite in AZ.

 

[Lucky]

Stephd you probably just worded it badly, but you almost look like you suggested using a firearm for purposes other than defensive.

 

[GTSteve03]

Stephd you probably just worded it badly, but you almost look like you suggested using a firearm for purposes other than defensive.

And what's wrong with that? Since we're all playing in SHTF fantasy land right now, I'm sure there are going to be times when that's necessary.

 

[Lucky]

Sort of seems that there's a clear line and once you cross it you become the problem. So you justify killing the owner of the house you want, need, and find his wife and kids in the basement. They're going to take up resources you need. Now stop and think - you're doing exactly what people here are concerned about happening to them.

Sure it's human nature, but we're intelligent so that we don't have to be slaves to our basic instincts. We know right and wrong and that's what separates us from beasts. And in the long run doing the right thing, ie respecting rights, is beneficial to all while the wrong thing is harmful to all. That's why it's the right thing.

 

[ScottD]

Sure it's human nature, but we're intelligent so that we don't have to be slaves to our basic instincts.

Uh, tell that to all those monsters (Lootie included ) after Hurricane Katrina. Neither were they smart or able to resist their basic instincts and that includes the LAW ENFORCEMENT types that saw fit to loot as well.

 

[buck00]

We know right and wrong and that's what separates us from beasts. And in the long run doing the right thing, ie respecting rights, is beneficial to all while the wrong thing is harmful to all.

Right and wrong can go out the window in a hurry when people are in a desperate situation and their security or food/water supply is compromised. Many people chose what is best for the individual during desperate times- and that is why we need to be prepared... the most dangerous person in a SHTF situation may not be a foaming-at-the-mouth looter or Chinese paratrooper rolleyes but Ned Flanders next door who suddenly panics because he doesn't have food or water and you do.


http://www.cnn.com/2008/WORLD/asiapcf/02/04/china.train.ap/index.html

His train left Guangzhou at 8:45 p.m. on Jan. 25. Two hours later, the train stopped in the city of Shaoguan -- where it was stuck for 10 hours, Wang said.

Food on the train ran out after the first day and nothing was being sold on the station platforms, he said. Usually, hawkers will offer instant noodles, hard-boiled eggs, spicy tofu or other snacks.

"I guess there were 600 trains ahead of us, and everything was sold out," he said.

The water also quickly ran out.

"We didn't wash our face or brush our teeth for two days because there was no water left," he said. "We didn't get more water until the third day."

Some passengers drank beer or the popular, fiery "bai jiu" liquor sold by the train staff, Wang said. A few got drunk, barged into the packed dining car, and demanded food.

Fighting broke out, Wang said.

"The cooks had knives and the passengers had broomsticks. There were no injuries, though, just pushing and shoving and neck-grabbing," he said.

When the staff finally procured some lunch boxes with rice at a stop, they doubled the usual price to $2.80 -- and some passengers bought most of the food and hoarded it, he said.

Wang said he feared that impoverished migrant workers could not afford the inflated prices. "I thought I could get robbed by people desperate for food," he said.

 

[ScottD]

Exactly, Buck. Good post and the "Flanders" types ARE the ones that will freak out the most because they live their lives in a "hey did diddly doo good neighbor!" way and never think anything bad can ever happen to them. So they don't prepare...and will freak when SHTF.

 

[SoonerSP101]

As long as I have my guns and ammo I'll never starve. Some rich person with no guns and no ammo will give me his/her food.