PROFILES
RECESSION RESISTANT INVESTING
Are You Prepared for the Upcoming Market Crash in 2022?
by Glenn Stromberg
was hoping the article title would get your attention. First, am I 100% sure a crash is coming? Yes! Am I 100% sure it’s going to happen in 2022? No, but I really do feel in my gut it is going to happen in 2022. Obviously, on Jan. 1, 2023, we will see if I am right. Here’s why I think it is going to happen this year. Our country and our economy have never been in this situation before. Our government is printing trillions and trillions of dollars. We have the highest inflation rate since the early 1980s. The supply chain is broken and, in my opinion, there are bubbles everywhere: the stock market, the bond market, and even some areas of the real estate market. Let’s take a closer look. FEDERAL SPENDING Back in 2008, when the govern- ment bailed out the banks, the total bailout package was $700 billion. Today, with the way the federal government is printing money, that would be a rounding error. Even before the coronavirus hit, the fed- eral government’s printing of money was out of control; after the pan- demic hit, they put it on steroids! I
Unfortunately, there is no end in sight. Once again, in my opinion, government spending is totally out of control. I’m kind of a geek—I study monetary history and past govern- ments that have printed money like the federal government is doing now. It never ends well. SUPPLYCHAIN In my lifetime, the supply chain has never been broken like it is today. When I go into a store of any kind, I make it a point to look at the shelves and see if the store is fully stocked. Without exception, every store is missing inventory—some a little less and others a lot. I talk to every business owner I know and ask whether they are having problems getting parts and inventory. Without exception, every- one has said “yes.” On a personal level, in my business, we are feeling the supply chain shortage as well. My company had plans to develop a build-to-rent community in the Huntsville, Alabama, area. We bought 264 acres and were designing 203 half-acre tracts with brand-new 1,500- to 2,000-square-foot manu- factured homes. There is an incred- ible demand for affordable housing, and the projected profit we were going to make was extraordinary.
But when we got the property under contract, the manufactured homes factories had a four-to-six-month backlog. Because we needed eight to nine months to develop the property and install all the utilities, that back- log would have been fine. By the time the 90-day due diligence ended, the factory backlog increased to more than a year, so we had to pull the plug on the project. Fortunately, we bought the property at a good price, and we were able to flip the land and make a nice profit. STOCKMARKET My area of expertise is real estate, but I have a couple of close friends who have been in the financial plan - ning arena for many years. They are real pros, and they tell me they have never seen the market like this before. Stock price-to-earnings ratios are at all-time highs, the bond market is a mess, and the whole system is being propped up by all the federal government money printing. If you look at the charts, the stock market is due for a large correction, and many believe it will be in 2022.
REAL ESTATE PRICES Now to my area of expertise—the real estate market. What has created
8 | think realty magazine :: march – april 2022
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