I wanted to run a few observations of mine by you and then pose a question. I am working in Afghanistan as a security contractor. I don’t have a normal security contractor job (i.e. doing PSD work for dignitaries), and I get to see a lot more of the country, frequently by myself. I see things turning in the wrong direction here, and while we could take the upper hand again, I don’t think the powers that be will make the right decisions. The U.S. will be turning over control of the violent south and east to ISAF soon, and ISAF troops and leadership are not equal to their U.S. counterparts. 2005 was worse than 2004, and I think the trend will continue to worsen in 2006. I can’t speak with any deep authority on Iraq, but the political reality of it seems to be poor, even if the military could do the job if turned loose and properly led. In short, I think these situations will result in a black eye for the U.S., and as a result the U.S. economy could take a beating this year. This is an extreme simplification of a complicated situation.
My question is about some money that I have invested in some standard mutual funds and a few stocks. They are managed by my local Edward Jones broker, and while he urges me to keep them there, I feel the market could take a beating soon. I’ve found some land over in Montana (This parcel is 112 acres for asking price of $128,000. [When not in Afghanistan,] I live in Eastern Washington, and land there is much more expensive than I am finding in Montana) and the invested money would make a nice down payment on that land. What do you think about my fears of money in funds, and would you agree that the land might be a good move? I already have a good lay in of food, weapons, et cetera and own a fair bit of gold and silver bullion so buying property has some appeal to me right now. Any input you have would be much appreciated. Thanks very much. – J. in Afghanistan
JWR Replies: In my opinion stocks are currently seeing a brief up tick in the overall bear market that began in April of 2000. It is essentially a sucker rally. I strongly recommend that you dump most or all of your stocks and (and stock mutual funds) and re-invest in tangibles. Which tangibles? Even at over $9+ an ounce, silver is still a relative bargain. Productive land–good farm and ranch land–is also worth buying, particularly in lightly populated regions that have plentiful water and that are well-removed from major population centers. Unlike urban and suburban real estate on the coasts and in resort regions, which is grossly inflated (read: a bubble waiting to burst), productive real estate in places like the Intermountain West is still affordable. When the real estate bubble does burst–most likely in the Spring/Summer of Aught Six–I anticipate that the over-inflated regions will suffer at least a 30% price decline, and perhaps even as much as 60% in outrageously over-priced areas like San Diego, the San Francisco peninsula, and Miami Beach. In contrast, the more affordable regions may see as little as a 10% price drop. So if buying there, your downside risk is minimal.
Be advised that although the best real estate bargains in Montana are in the eastern half of the state, that it is also the region that is downwind of scores of nuclear ground burst targets such as Malmstrom AFB and hundreds of missiles silos. For maps of U.S. military nuclear targets, see: www.nukewatch.com/pathfinder/20053fall/page2.pdf So unless you see a nation state nuclear exchange as only a remote possibility, then I recommend that you only buy property that is is at least 40 miles upwind of any of Montana’s nuke targets.
Take good care of yourself in Afghanistan. May God Bless You and Yours!