Okay it’s true. We have not written in a while.
We have been busy living our lives and took a long Christmas break. This not only meant family, surfing, playing guitar, and such. It also meant we have been planning for the new year. We have been thinking hard about the theme for 2013 — something we will revisit over and over again throughout the year — and we think we have a winner:
For this year, we want to spend less time on the big picture, macroeconomic views, theoretical stuff and more time on practical things you can do to become more resilient and self-reliant in your everyday life. Don’t get us wrong, we are sure to wax philosophical about the events shaping our lives on occasion. But we want to focus more on helping you become ready for whatever happens.
That starts with the simple concept of hedging…
Merriam Webster defines “hedge” as a means of protection or defense (as against financial loss). And that’s certainly part of it. But, we like to think of hedging a bit differently. Hedging is really about having options. Or rather, it’s about maximizing your options.
We told you before Christmas about a journalist friend of ours who attended a prepper conference recently in which all the attendees were preparing for a different SHTF scenario. One was convinced that the electrical grid would be destroyed by EMPs; another was preparing for a global financial crash; others believed it would be nuclear war or other types of catastrophes.
Besides being entirely too pessimistic in our view, “prepping” in this way is not a very smart way to hedge. Sure, any one of these scenarios COULD happen, but it’s just as likely that some new invention or breakthrough catapults us into a new era of prosperity. The mistake that many of us make when we think we’re hedging intelligently is that we go “all in” on a specific eventuality that we believe will occur.
Our opinion is that it is not necessary, and in fact is detrimental, to go “all in”. Hedging wisely is about preparing for different eventualities. Will the economy crash, or are we at the bottom of a new long-term bull market. Is peak oil a real threat, or are the oil optimists right that there’s still plenty of black gold under the surface? Will governments inevitably become more tyrannical and businesses more corrupt, or are we on the verge of an enlightened age of commerce and limited government driven by the Internet?
Let’s face it, no one knows the answers to any of these questions for sure. And to be brutally frank, neither do we. Betting it all on one possible outcome is a gargantuan risk. But hedging in a way that maximizes and balances your options — health, family, friends, finances, — is a surefire hedge strategy.
So what we DO know for certain about the future is that there will be change. There alway is. And since there is going to be change it can either work for you or against you.
We want to make sure that it works for you.
In order for this to happen you need to be nimble and agile. You need to be able to jump in any direction at a moments notice. For this to be true you need to have ALREADY taken some small steps to prepare. You need to be ready to pounce on opportunity.
Success is when preparation meets opportunity.
- If the US dollar starts to dive, can you transfer your savings into another currency with one phone call.
- If you lose your job tomorrow, do you have any alternative sources of income in place to take up the slack?
- If the markets DO tank, are you fully invested in stocks, or do you have some money sitting on the sidelines ready to pounce on bargains?
- If inflation gets worse as many predict, do you have at least some precious metals?
- Do you grow at least some of your own food?
- If health care costs go up even more or Medicare benefits or slashed, have you made your own health a top priority? Have you really made a commitment to eat better and exercise more?
Small steps will give you direction and momentum.
The idea in hedging is to be prepared for all eventualities.
These are just some of the themes related to effective hedge strategies we will be focusing on during the coming year; Simplifying your life. Opening a foreign bank account. Growing at least some of your own food. Creating multiple streams of income. Purchasing foreign real estate.
So, 2013 will be the “Year of the Hedge”.