January 24, 2013
What would you do if you hit your breaking point… tomorrow? Where would you go? What would you do with your time and resources? It’s a great question worth asking.
Some close friends of mine have been in town for the past few days escaping the northern winter and basking in the exceptional Mediterranean climate of central Chile. And just yesterday, we were discussing this exact issue.
Two of them are successful real estate developers from the People’s Republic of California, and, having already reached their breaking points, they’ve pretty much made up their minds to leave.
But what are they going to do overseas? They’re still young and energetic. And when you’ve spent your whole adult life in the same industry, in the same place, it’s not easy to pick up and restart your professional career abroad.
Yesterday, for example, one of my friends was telling me about a budding development in the US that, while potentially lucrative, would tie him to California for the next five years.
“I don’t really want to be in California anymore,” he explained, “but I know this business so well… I always go back to this way of thinking.”
It’s totally understandable; we naturally gravitate to where we feel the most comfortable. And the unknown is anything BUT comfortable.
Again, though, when you look at the big picture trends, where is the long-term opportunity? Is it in one of the most bankrupt states within the most bankrupt nation that has ever existed in the history of the world?
Or, perhaps, are the prospects brighter in healthier emerging economies that have fantastic fundamentals and numerous growth catalysts…?
Don’t get me wrong, there are plenty of great businesses and investments to be had in the US and Western Europe. If the history of economic decline teaches us anything, it’s that there are ALWAYS winners and losers in any situation… even in extreme cases like the Great Depression or hyperinflation of the Weimar Republic.
Similarly, bankruptcy attorneys are going to clean up in the West. Real estate is due for a frenzied bounce. Savvy investors can pick up high quality distressed assets on the cheap. Bankers are doing quite well receiving interest-free loans from inflated money supplies. Etc.
But it’s clear where the long-term trends are pointing. Massive debt is a killer. Bloated entitlement spending is a killer. Populist regulation is a killer. And no amount of optimism can change this reality.
It’s important to keep this big picture perspective in mind, particularly when thinking about business and investment deals. There may be some easy money to be made now… but what will the economic landscape look like 3-5 years from now? While it’s possible that things will still be OK, do you really want to bet the farm with such looming storm clouds overhead?
A better option may be to consider diversifying abroad… seeing how you can put a portion of your skills, experience, assets and expertise to work in some of the world’s most exciting markets.
It really is a big world out there. And while the prospect of change can be daunting, it just takes a bit of patience and time on the ground until the opportunities… and rewards… become crystal clear.