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Archive for July 2012

Substantial profits expected from investing now

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By travelling and talking to various investors, I recently see that many are actively investing the cash through purchasing various assets — rental properties in prime locations, land, production assets … In many cases such assets already generate cash flow, often as high as 10% p.a. of the amount of invested. The purchases are often made in property auctions, from banks and other distressed situations but sometimes just made possible because of subdued valuations due to general market situation and sense of crisis. The situation is substantially different from a year or so ago when most preferred to stay in cash or equivalent.

Those are low-tech, mundane assets which I feel will get revalued in the marketplace during the next 3-5 years, often doubling the investors’ money. Once the crisis is over [and the investing activity suggests it may be over sooner than generally expected], the assets will get revalued again to yield 5% rather than 10% today with the same nominal cash flow. As well, once the global economy stabilises, the consequences of the quantitative easing should filter through to show up as inflation — no doubt that there will be no reverse quantitative easing and this should mean more debased paper money in general. 

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Written by A.S.

July 31, 2012 at 7:38 am

Posted in Uncategorized