There is quite a lot of optimism around.
Money is flowing…rates are low…debt is cheap.
But the super-rich are worried.
What are they worried about?
Well, as we told you on Wednesday, some are worried about their own mortality.
And many are worried about the break-up of civilisation.
They are concerned about their own survival if the end of days comes. So, they are buying insurance and preparing for disaster. Just in case…
How Do You Prepare For Disaster?
Well, some are looking at leaving the planet to go into space.
Others are buying bunkers. There are a few companies around catering for this (not so new) demand. Some are signing onto projects like Survival Condo.
The company has repurposed an old missile underground silo and turned it into luxury survival apartments. The apartment complex includes every luxury: game rooms, a bowling alley, gym, pool, waterfalls, even a shooting ground to practice in case of attack. It can sustain 75 people for at least five years.
The units sold out before construction ended in 2012 — all except one, which the head of the project kept for himself. Now the company is completing a second silo.
Wonder how much they go for? Well, unless you have a few million in the bank, you won’t be able to get your hands on one of them.
Others are getting a second passport and investing in property abroad, not only to have passive income — as farmland offers — but to have a safe haven to retreat to. New Zealand has become a prime destination. In fact, in Silicon Valley, ‘going to New Zealand’ has become a code word for preparing for doomsday.
Speaking to The New Yorker earlier last year, LinkedIn co-founder Reid Hoffman estimates that more than 50% of Silicon Valley billionaires have bought some level of ‘apocalypse insurance’, like a bunker.
I mean, I get it. There is a lot to worry about.
War, terrorism, earthquakes, tornados, hurricanes, intercontinental ballistic missiles, plagues, rise of the machines, meteorites hitting the Earth…the list goes on.
But, as Hoffman continued, something that is making the elites very anxious is the other classes.
‘The fears vary, but many worry that, as artificial intelligence takes away a growing share of jobs, there will be a backlash against Silicon Valley, America’s second-highest concentration of wealth. (Southwestern Connecticut is first.) “I’ve heard this theme from a bunch of people,” Hoffman said. “Is the country going to turn against the wealthy? Is it going to turn against technological innovation? Is it going to turn into civil disorder?”’
The last crisis caused one of the biggest economic downturns. Since then, inequality has increased.
As Bloomberg recently reported, between 2007 and 2016, the top 10% of Americans saw their wealth increase by 8.3%. Meanwhile, the 50–90% saw their wealth drop by 17% and the bottom 50% saw a much bigger decrease, 52%.
There are also more billionaires today than ever before, and they are richer than ever.
As CNBC reported, there are now 2,208 billionaires. This is up from 2,043 only a year ago. And, their wealth has increased. Billionaires now hold a record high average wealth of US$4.1 billion.
Things are OK…for now. But what if there is a massive financial crisis? One bigger than we’ve ever seen? One that turns the poor against the rich?
After all, there is a lot more of them…
Is This Paranoia?
This may be paranoia. Yet this paranoia is coming from tech people who saw the previous crisis coming, from the ones who made all the money.
And they are worried about the next big crisis. Worried enough to make plans to run at a moment’s notice.
Many of us here at Port Phillip are quite concerned too. Some of us think that the next recession could be worse, much worse.
That’s why, back in April we held a whole investment summit here in Melbourne to help us understand and prepare for what is yet to come. The summit was called ‘Paradox of Prosperity: How to Navigate Your Wealth Through the Perils and Opportunities of the Second Gilded Age’.
What do we mean by ‘paradox of prosperity’?
Well, the world is in massive amounts of debt, and debt has been increasing fast in recent years because of cheap credit.
Debt has created a lot of prosperity, and confidence. Yet what happens when there is a loss in that confidence?
The summit happened back in April this year. You may have missed it, but we had a professional crew record the whole thing. Which means, you can still access the recordings and listen to every idea, warning and discussion that took place…and it won’t cost you millions.
To claim your ‘virtual seat’ click here.
Editor, Markets & Money