Mobile Home Park Mastery: Episode 300

A Mantra To Keep You Out Of Trouble

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There’s a recession coming to America soon – that’s the opinion of virtually every economist. So how can you prepare for the coming financial apocalypse? There’s a simple mantra that will keep you out of trouble in every recession/depression, and we’ll review that concept, why it’s perpetually true, and how to get your investments aligned with that quickly in this Mobile Home Park Mastery podcast.

Episode 300: A Mantra To Keep You Out Of Trouble Transcript

I am obsessed with recessions and depressions, I read everything I can find on the topic, I'm one of the few people out there who have read even 1000-page treatises on the economics behind recessions and depressions, because I'm a skeptic. I'm a doomsdayer, I'm a pessimist. This is Frank Rolfe for the Mobile Home Park Mastery Podcast. We're talking about recessions and depressions but more importantly, a mantra that you see throughout all of the publications and the analysis by economist of what happens in recessions and depressions. And basically it leads to the general conclusion that going in to any downturn in American history, there are only two things that work, one, necessities, things that people must have. And the other, vices.

If you go back to the Great Depression back in the 1930s, you found that there were two things that had higher sales during that time than any other time in American history. Number one were shoes, you had to have shoes, you were standing in long lines at the food kitchen, you were walking all over America trying to find work, you had to have a continual supply of shoes, shoe manufacturers therefore did fantastic during the Depression.

You also found that Americans during that period were much bigger drinkers, because they had to forget there was. Things weren't going well at all, they didn't have a job, they lost their family, they lost their hope in life, and the only way they could get through the day was to basically be intoxicated. Now, St. Louis did extremely well during the Depression, and that's because in St. Louis, they were able to say, "First in shoes and first in booze." That was their proud declaration through the Chamber of Commerce of St. Louis during the period, because the Brown Shoe Company, the largest shoe manufacturer in America, was located in St. Louis, and their revenue was off the charts during the Depression.

And then of course, you had alcohol production by plants such as Budweiser based out of St. Louis, providing the Booze side. Now, if you look at all of the other recessions and depressions in modern history, you'll see the same thing, when times get bad, people only buy things, they have to have, all the luxuries go out the door. And/or they buy things they really shouldn't buy, because it's the only way they can cope.

Back when I had my billboard business, during the Texas Savings and Loan crash, the only consistent advertiser that I could get on a billboard were topless bars, because topless bars were places the that people went back in the '80s to forget life. Because when things were so bad, they couldn't bear to go home, and they didn't have a job to go to an office, they didn't know where to go, and they would often go to that large endless chain of topless bars that Texas had.

So if we all agree, the necessities and vices are pretty much where it's at, because they are, when times get bad. How do you invest in those? Well, let's start off with vices, personally, I don't invest in any vices, I know there are people out there who've been telling me in recent times, "Oh, you need to invest in marijuana farms." I can't, I don't believe in it. Never tried marijuana, never desired to. Don't know anyone who does, and I just don't want to support products that I don't personally like. I'm virtually a Carrie Nation when it comes to drinking. I don't like the concept of people drinking, I don't drink and I've never liked it, so therefore, I really can't invest in vices, it was just not going to work for me as a lifestyle choice.

So then that leaves necessities. Now, how do you invest in a necessity? Well, to invest in a necessity, you have to find certain niches of American life, which we all have to have. Now, we all have to eat, that's for sure. So, "Hey, let's all just invest in food." But the problem is, when you look at investing in food, most of the food you can invest in is a luxury, if you say, "Hey, I'm gonna invest in Chipotle, because I really like their burritos." Well, that's great, but you know what, with Chipotle that's not where you go, when you run out of money, that's not where poor people go to eat. Where do poor people go to eat? Well, they go directly to the source and cook it themselves and basically go and buy the actual food. So the only way you can really be in the most stable parts of food is to be a farmer, and that's probably why you see Bill Gates has overnight become the largest private owner of farmland in the US. But farmland investing is very, very low returned.

I live in the Missouri Ozarks, and farming here is a big, big deal, there are farms here so large, that they have their own 18-wheelers, their own large equipment. But it's a tough way to make a living. Now, Bill Gates can make money off of his farming, I guess, 'cause he has so many acres but for the average person investing in farming and in food production would be nearly impossible.

So the necessity I like is housing. I think that people have to have housing, because they do. And if I'm going to be in housing, I wanna be on the low end of housing, I wanna be in the Dollar Tree of housing, I wanna be in the Dollar General of housing. I wanna be in housing that everyone has to have, and it's the most affordable type imaginable, and that's why I ended up in mobile home parks and remain in mobile home parks, because I like being in things that you gotta have that are really, really inexpensive. I don't wanna be in the luxury side of house, I know people who have. I know someone who actually owns and rents houses in Nashville to country and western stars, it's a niche they created, but that would terrify me, because that is the ultimate luxury upon luxury, and I don't have any confidence in things that people don't really need. But people really, really need affordable housing so as a result, it's my opinion that you're going to find that mobile home parks will do exceedingly well in the recession or depression, whatever it's going to be, that's forthcoming. Most economists predict we're going to have our next recession or depression in America sometime between now and the end of 2024, and I would agree with that statement.

If you look how long it's been since our last recession, the Great Recession of 2007-2008, it's been way too many years. Based on typical recessions and the cycle, we should have had a major recession back in... Oh, I don't know, it would already been really long if we'd had it by 2018, but here we are five years later, basically, and we still haven't had the big recession. We had a slight one during COVID, but you can't really count that, 'cause it snapped right back. So if the economists are correct and we're going to have the next big recession and/or depression coming up between now and the end of next year, then how do you prepare for that? Well, you can't can invest in vices, at least I don't think you can. I don't know how you would do that, I'm morally completely opposed to it. But you can get involved in necessities, you still have the opportunity and the ability to invest in affordable housing via mobile home parks. It's definitely worth a shot, it's worth the investigation to figure out, if that would work for you. Now, I don't have any confidence in any of these other investments we have in America, I believe like most economists, when the recession/depression finally hits, the stock market is going to go down the drain.

It'll probably lose in a very quick fashion, maybe 20% of value, maybe more. And I don't really have much confidence in the bond markets, and I don't think if we have a recession/depression, you're gonna be able to get 4% yields on CDs anymore. I don't think Jerome Powell will be able to keep interest rates high. Typically in most recession and depressions of the past, interest rates have dropped around two and a half points from the start of the recession to the end, that being the case, you're gonna see those CD yields drop back down somewhere between where they were at in 0.25 and the 4% to 5% that you have today.

Meanwhile, I don't think you'll see any cure to inflation with solar schemes will be chugging along about 4% or 5%. So if you're gonna invest going forward, facing the great depression/recession, knowing you have to battle and beat 5% or so in inflation, and you can't do it in traditional channels of the stock market or bond market, then really the only option is alternative investing. So where do I think you need to be for the next recession/depression, you need to be in some form of alternative investing that focuses on necessities. And again, the one that I prefer is the mobile home park industry, but if you find a different way that you can invest in the lower end of the housing market, then you definitely need to go do that, because that's the only safety and security, you will have when things get really, really bad, are necessities and vices. This is Frank Rolfe, from Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.