**Ding-Ding**
“This is your captain speaking. It looks like we are about to hit a patch of rough air so I am going to turn on the fasten seatbelt sign and ask that you all return to your seats. Once we clear, I’ll let you know when it’s safe to move about the cabin…”
I recall being in a small two-engine prop plane from Miami to the Bahamas and flying through a thunderstorm. There were updrafts and downdrafts and that small plane went through them all like a not-quite-secured-to-the-tracks car on a roller coaster. My stomach churned, my body momentarily weightless as we dropped hundreds of feet in altitude in a second. Followed just as suddenly by my weight pressing hard against the seat as the plane was thrown upward again another few hundred feet. Inside the plane there were screams. Moans. The sounds of retching. The smell of vomit. Then cheers and tears of joy when we cleared the storm. It was equally one of the most thrilling and terrifying moments of my life. And then there were the markets last week.
Okay, maybe just a bit of hyperbole there but still - the market action last week was so roiling that I asked my doc for a neck brace. Forty basis point shifts in interest rates over the course of two days? Pulling those kinds of G’s will compress one’s spine. The current market environment is… extraordinary. That is the best word for it. Most years we economics-market nerds dissect nitty-gritty details about ho-hum basis point shifts in interest rates and analyze to death a single word uttered by a minor Fed official. That is our daily fodder, and, unless you are a supremely supreme nerd it can all get a bit tedious. BUT! But the movements and drama of today’s world are manna from heaven for the chattering class (me). It is all so thrilling. So easy to opine on and write about. So very Extraordinary.
But also terrifying. Slow, ordinary shifts in markets over time are easy for society to absorb. Humans are very adaptive animals and adjust well. But it is the whiplash of rapid rises and stomach churning falls that cause havoc. Too much can make one puke. And it is within the storm of Disorder that people get scared en masse. And that is difficult. And it is dangerous.
People need to make Big Decisions about things like money and life and that is hard enough in the good times. But when the economy is violently bouncing and bobbing about like a meth-addicted, bi-polar squirrel on a flimsy branch, it is damned hard to make a call. People will clam up, get scared. In disorder people tend to fear and make fear-based decisions. And fear in the hands of an evil-minded despot (or group of despots) is one of the most potent weapons in the world - more so than all the nukes in Russia.
When you are a pilot in a small two-engine plane headed into a tropical thunderstorm, it is imperative that you not panic. It is imperative to not make fear-based decisions. It is imperative to maintain control and to rely on proven systems. And if those systems malfunction? Well, keep your head about you and do the best you can. And if you are not a pilot but just a passenger in the plane? Well, you pray to God that you chose a good pilot.
So where are we headed from here?
Dear reader, I do not make predictions. Predictions being very specific and all-too-certain. And I am rarely certain. (If you are really nerdy, read about Complexity Ecnomics and why predictions are just silly here: Foundations of Complexity Economics).
Therefore predictions are against my religion. I’ve previously described our economy as a chaotic, tangled web of billions of simultaneous, emotional decisions all happening at once and into infinity. How on earth can anyone predict that? They can’t. Not really. There are, however, trends and one can have a hunch - a guess really - on general direction. Like the weather: I am pretty dang certain that in Texas it will be colder in the winter than in the summer. But I have no clue when it will start. I have no idea just how cold it will be. I have no idea how wet. And I sure as hell don’t know how long it will last. All I know is: colder. Then it will change and become warm again.
And we head now into economic and actual winter. I am confident that it is going to be rough over the next few months. The world stage is set for both Fire and Ice. All the Fed’s horses and all the Fed’s spokesman keep telling us that they are absolutely NOT going to put humpty-dumpty back together again anytime soon. Maybe they (the Fed) have the fortitude to keep kicking the economy as it writhes on the ground (for its own good, of course). Then again, maybe they fold under the pressure of 7.8 billion angry stares and turn the spigot back on. And maybe there will be a war. Maybe not. I have no clue. It is all quite up in the air right now - not unlike a small prop plane in the face of an oceanic squall.
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Fortunes are made when there is blood in the streets
I am a value investor at heart. I love a good deal. I love the diamond in the rough. So this is a song that I don’t mind singing over and over: for the right buyer there are going to be plenty of opportunities in the wars to come. The right buyer is someone who is savvy, patient, has a long time-horizon, and plenty of dry powder (cash). That buyer must possess resolve (intestinal fortitude in Marine Corps parlance) and will also need to be flexible and creative. I also don’t mind pointing out that it is these brave souls who turn the stampede of down markets. These contrarians are at the front of the line when economies turn from sour to sweet again and are set to profit handsomely for their courage under fire.
For sellers… well guys it is tough out there and getting tougher. Each and every single one of you has individual circumstances that must be considered. If you are an RE professional, you likely know exactly what you are looking at in today’s market. If you are not a professional and are thinking of selling real estate, I highly recommend you speak with someone that does know what they are looking at. Please reach out if you need help: dustin@grandlandco.com. If I can’t help you I can at least point you in the right direction.
I continue to believe that producing agricultural land is a pretty safe bet if you are looking for a land buy. So too any producing acres with an ag valuation. And as the New Economy rises from the ashes of the old and the global order sorts itself out, I think there will be opportunities in some undervalued areas of Texas. For example, I’ve been speaking with a seasoned agent in Atascosa County south of San Antonio, and I am starting to develop a bullish thesis on this area. And there are plenty more out there too. My job is to find them. But that is a subject of future Deep Dives.
Leaving on a positive(ish) note
The tone and tenor of my writing has been doomy of late. I reiterate now that I am long term bullish on the United States of America and especially the Great State of Texas. But I do you no service, dear reader, to gloss over the rough times to come. Would the airline captain allow you to wander down the aisles knowing damn well that there is some epic turbulence ahead? Nope. Nor will I. You just gotta get through it until there is smooth air on the other side. So please return to your seat, fasten your seatbelt, and I will let you know when it is safe to move about the cabin.
I am very grateful to the incredible land professionals at the Grand Land Company. They are the best bunch of land nerds this side of the Mississippi.