In These Uncertain Times…Do These Things.
Previously, I wrote about the macro trends we see unfolding as a result of the Coronavirus outbreak.
This week, I wanted to cover the practical actions you can take to hedge against those predictions.
The primary concerns to prepare for are:
- Poor performance of traditional assets such as stocks, bonds and real estate.
- Supply chain disruptions for food, medical supplies and consumer products.
- Civil unrest and government overreach.
- Significant labor shortages.
The expectation is not that empty shelves, plummeting asset prices and civil unrest are a constant but that they emerge periodically creating disruptions to everyday life.
In such circumstances, the tactics below would help you minimize those disruptions in your household.
Home grown or locally sourced produce — The recent bust in the winter fruits and vegetable market is signaling growers to produce less food for next season. Combined with a potential shortage of harvest workers, produce prices may increase sharply over the next year.
Planting a small backyard garden or pre-paying for produce from a local farm co-op is a good option to guarantee a supply of reasonably priced produce coming into next fall.
Bartering goods — In a marketplace with inconsistent supply and high demand, the exchanges of goods are often more attractive for deal making than cash.
Cash is useful when we can expect it will allow us to purchase the goods we want but not so useful if those goods are hard to find. Bartering, for example, allows two parties to exchange hamburger meat for bourbon or hand sanitizer for baby wipes.
Rural or agricultural property — Commercial and residential real estate are likely to struggle as remote work and business closures kill demand for commercial space and restricted movement and a down economy put the brakes on residential real estate.
Even a modest rural property however, has the potential to generate revenue from farming, provide a safe non-cash store of wealth or just be a retreat from the city during outbreaks.
Long term protein storage — Recent closures of meat packing facilities demonstrate the vulnerability of the meat supply chain. Once the meat gets expensive or runs out, everyone moves to plant based proteins like beans and the demand increase causes yet another supply shortage.
The best bet is to begin stocking up on protein sources now until you have enough to last 6 to 12 weeks. Around 12 weeks after the shortage begins, chicken farmers should be in position to scale up the supply or eggs or poultry.
The most difficult part of food shortages is that they take an entire growing or calving season to rectify so be prepared to go while without the typical protein availability.
If you have the space in the backyard, look at buying a few egg hens.
Labor shortages — The federal $600 per week unemployment enhancement benefits are going to drive labor shortages in the retail, gig, childcare, eldercare and service industries.
Once laid off, many workers will find they earn more on unemployment than they did at work and not return to work until the benefits run out or their employer raises their wage.
No good hedges against labor shortages exist for individuals. The government could loosen immigration requirements to fill jobs or compel these workers into the workforce but neither of those are likely.
The best preparation is simply an understanding the you won’t have access to the same service levels you had previously and you’ll find yourself doing more tasks on your own or waiting longer to have them done.
Self-sufficiency, DIY and survival books — With labor and supplies scarce, you may find projects that need to be done the old fashioned way. It’s easy to assume that you can find every answer through Google but there is some critical information you should own in hard copy or digital format.
Published materials are more reliable than those that surface via search engines, not subject to broadband speed and won’t disappear if the content creator stops paying for the server. Specifically, you should look for material on medical care, home repair and “homesteading.” A good homesteading guide typically includes information on traditional skills from raising chickens to canning your own produce.
Upgrade your work from home space — Quarantines may happen several times in the next two years and your work-from-home productivity is tied directly to your setup. If you have the resources, buy a new computer, upgrade your internet connection and invest in video conferencing enhancements such as lights, mics and backgrounds. Also evaluate upgrading your home office with sound proofing panels, ergonomic chair and larger desk.
_
The most important part of preparing for any of the contingencies listed above is to prepare now for the areas you feel most vulnerable.
If you “wait and see,” the products you need may be unavailable. If you end up not needing any of the items you buy, you can always sell them on eBay or give them away as holiday gifts.
