Workshop Sections:
Day One
1. The Essentials Of Turning Inflation Into Wealth (*)
2. Understanding Asset Deflation In An Environment Of Monetary Inflation
3. Finding Hidden Opportunities When Prices Are Falling – A Real Estate Case Study (*)
4. Protecting Against Inflation With Cash Flow Generating Property Investments (*)
5. Testing Real Estate Robustness Under Varying Inflation / Deflation / Taxation Scenarios (*)
Day Two
6. The Boomer Retirement Dilemma
7. Inflation Arbitrage & The Case For Inflation (*)
8. Manipulations, Deceptions & Reality Hedges (*)
9. When You Push Against The Future – And The Future Pushes Back
10. Solutions For The Long Term (*)
Day Three
11. Accumulating Hidden Wealth In A Paranoid Fashion (*)
12. Outrunning A Falling Market (*)
13. Tax-Advantaged Multiple Asset Strategies For Inflation & Deflation (*)
Each day ends with a double-length discussion section to follow-up on the points of greatest interest from the presentation sections.
(*) Means There Is A Focus On Finding & Understanding Solutions For Individuals In The Section (10 of 13 Sections)
Brochure Excerpts
Three Day, Discussion Oriented Workshops
Topics Include:
Real Estate Investment In 2008 & Beyond
Long-Term Asset Deflation: How Retirees Can Fight It
Timing Asset Allocation Shifts Over The Inflationary Cycle
Monetary Inflation Opportunities In A Time Of Asset Deflation
Lifestyle Insurance: Constructing Skewed Portfolio Returns
Inflation Tax Timing Considerations
Gold, Energy & Other Tangible Assets
Inflation Arbitrage
Workshop Overview
The goal of the workshops is to give you the tools and knowledge you need to both protect yourself and profit during today’s time of rapidly developing economic crisis. We will explore upcoming investment challenges – and learn multiple strategies for turning those challenges into financial opportunities.
After a brief review of the Turning Inflation Into Wealth mini-course, 90% of the workshop will be spent going to the Next Level. We will start by adding the fundamental element of long-term Asset Deflation to our mix. Asset deflation in purchasing power terms is not only the #1 threat to the real estate market, but also the most difficult challenge for long term investment in general, creating major challenges for retirement oriented investors.
We will integrate Asset Deflation with Monetary Inflation and Inflation Taxes, and explore how this “triple threat” creates a dangerous illusion of opportunity in the real estate market for those investors who see only nominal dollars. We will then develop two powerful alternate strategies for creating real wealth that few currently see.
We will explore a detailed case study showing how these two distinct strategies can use different return sources to deliver the after-inflation and after-tax benefits of a conventional investment earning over 40% — in the midst of Monetary Inflation destroying 68% of the value of the dollar, even while Asset Deflation is destroying 44% of the value of real estate.
We will explore the devastating implications of the combined forces of Asset Deflation, Monetary Inflation and Inflation Taxes upon the hopes of tens of millions of retirees and long-term investors. We will then discuss strategies for getting your financial future “out-of-step” with the Boomer generation, and instead turn peril into long-term benefits and lifestyle protection.
We will show you why there is no one investment that is best for fighting the combined forces of monetary inflation and asset deflation – but rather a series of strategies, with shifting asset allocations at different stages of the monetary inflation, asset deflation and Boomer demographic cycles.
We will show how to construct skewed strategies with much more upside potential than downside exposure, explore more sophisticated inflation tax considerations, and also integrate considerations for alternative tangible asset strategies.
We covered a lot of ground in the Turning Inflation Into Wealth mini-course, delving into topics often considered too dry and complex for non-economists. The course objective was to effectively deliver vital learning to the people who need it the most. The numerous enthusiastic letters received from readers, which continue to arrive every week, indicate that this carefully designed process met that objective for many of you – and I am gratified that this free and educational program has worked so well. Now, it is time to take that understanding and those tools to an entirely new level.
I strongly believe that understanding the three forces of Asset Deflation, Monetary Inflation and Inflation Taxes will be the single most important thing you can do to protect and improve your standard of living over the long term. I believe that these forces will be the primary determinants of real financial success for investors in the decades ahead, and that those who fail to understand these forces will be at great risk in the future.
The “conventional wisdom” about long-term investing has taken a terrible beating lately. In the workshop, our focus will be on learning to “think out of the box” on these vital issues. You will learn innovative strategies for positioning yourself so that powerful negative economic forces will redistribute wealth to you, rather than taking wealth from you. As you learn, you will be highly encouraged to frequently ask questions, with double-length sessions at the end of each day devoted entirely to making sure your specific questions are explored and answered.
The Turning Inflation Into Wealth Workshops are about providing valuable information – much of which is available nowhere else – delivered in a personal and interactive manner. If learning how to effectively deal with, and even benefit from, the forces of Asset Deflation, Monetary Inflation and Inflation Taxes is important to you, then attending a Turning Inflation Into Wealth workshop may be one of the best decisions you can make for your personal financial future.
Over 1,000 pages of proprietary written materials will be given to every attendee. This includes a complete copy of the mini-course readings; two books by Daniel Amerman; many supplemental readings; outlines for the workshop discussion; and 200+ pages of detailed financial analyses that cover how particular strategies can perform under a wide variety of what-if scenarios.
About Dan Amerman
Your workshop leader is Dan Amerman, the creator of the Turning Inflation Into Wealth series. Mr. Amerman is an author and consultant who has been a speaker on financial topics for many years. His current series of articles are a regular feature at contrarian investor education websites.
In addition to “The Secret Power Within Your Mortgage” and “Contracts With Our Children”, Mr. Amerman was also the author of “Mortgage Securities” and “Collateralized Mortgage Obligations”, published by McGraw-Hill and a subsidiary. Covering subjects usually considered complex, the books were known for their innovative, easy to understand approach and somewhat controversial conclusions.
The first book was a professional bestseller for a year, and an Asian edition was published. The books led to speaking engagements across the country, in front of audiences of bankers and finance professionals. Much of what was once considered “controversial” has since become accepted, and the books have been cited by a number of professional texts, as well as SEC judges, and research papers from the Federal Reserve and Oxford University, among others. (Any parallels with Turning Inflation Into Wealth, which is at an earlier stage in the process, are entirely intentional.)
As a former investment banker responsible for new product research and capital market originations, Mr. Amerman was a leader in developing mortgage hedging and synthetic securities strategies for financial institutions, with an emphasis upon integrating the option component within mortgages into overall asset/liability management planning. This work (which forms the basis for some of the advanced topics in the workshop) led to numerous speaking engagements and workshops, for sponsors including The Institute for International Research, New York University, and many banking groups.
Dan Amerman is a Chartered Financial Analyst with MBA and BSBA degrees in Finance from the University of Missouri.
Core Topics Of The Workshop
The following interwoven topics are the heart of the workshop:
1) Monetary Inflation, Inflation Taxes & Asset Deflation – Surviving & Thriving The Convergence.
There are three great forces that may be merging to dominate the years ahead: Monetary Inflation, Inflation Taxes and Asset Deflation (when defined in purchasing power terms). Individually, these fundamental forces have something in common – they all take real wealth away from investors. What happens when they converge?
As an example of how the three forces can work together, let’s say that you have an asset, and the price of that asset doubles over ten years. Great news! Except that monetary inflation dropped the value of a dollar to a quarter. When we adjust for a new dollar being worth an old quarter, that means that while the nominal dollar value of our asset doubled, the purchasing power of what we could buy if we sold the asset fell in half. That is asset deflation in purchasing power terms. The monetary inflation just hid the asset deflation – and the two are often a team that work well together. Making the work of that team more effective is that the tax code doesn’t recognize monetary inflation, so we have to add in the third element of paying steep inflation taxes on monetary inflation for the privilege of losing half the real value of our investment to asset deflation.
We had to cover a lot of ground in a limited space in the mini-course and book, so we concentrated on the debt side, and let the tangible asset just keep up with inflation. In the process, we learned how to protect ourselves from inflation, and while we started with basic economic principles, we ended up going to some reasonably sophisticated places, such as the reversal of inflation taxes.
In the workshop we take things to the Next Level entirely, as we separate monetary inflation from asset deflation, and let the purchasing power of assets move independently of the purchasing power of a dollar. Once we have done this, once we have moved to this level, we can then move forward to understand the full dangers of the combined three forces – as well as the pockets of opportunity for turning loss into gain.
2) Real Estate In 2008 & Beyond.
There are three basic strategies for turning the current fall in real estate prices into substantial future profits. Only one of these strategies is receiving wide attention, and it involves the attempt to estimate when real estate prices have bottomed out, and then buy at that level. Timing that bottom will be tougher in practice than in theory, and this difficulty will be compounded by fierce competition as millions of other people attempt the same strategy. The worst of it is that even if you do succeed in timing the very bottom – all you’ve really done is maximize your inflation tax exposure.
In the workshop we will leave the common approach behind and take the Turning Inflation Into Wealth principles to a new level, as we uncover the other two core strategies for turning real estate market turmoil into maximum opportunities for personal gain on an after-tax and after-inflation basis.
One of these strategies will likely reach its point of maximum real profitability before the price bottom is reached – when the “crowd” says it is still too early. There is a good chance that the point of maximum profitability for this strategy will be reached within the next 12 months.
The other strategy will likely reach its point of maximum real profitability after the price bottom, after the “crowd” will say that the best opportunities are already gone.
What the two strategies share is that both are quite likely to produce greater after-tax and after-inflation profits than buying at the price bottom, indeed, possibly much greater profits.
In this section of the workshop we will ask the question: how can you potentially create much more real wealth through deliberately paying more money for a piece of property this year than what you anticipate the price will be in another year or two? In a guided group exercise, and using a simple example that you can fill in with pen and paper (no computer needed) – you and the rest of the group will, step by step, find your own answer, and convince yourselves.
After thoroughly exploring the first counter-intuitive opportunity, we will address a second question: how can you multiply your real wealth through deliberately missing the bottom and (as an example) paying twice the price, long after the bottom was reached? This powerful wealth creation strategy is crystal clear in theory – and abundantly historically proven in practice – but is tough to wrap your mind around, because it just sounds so wrong. Once again, you will start by convincing yourself, in guided group exercise using pen and paper, and a simple example with simple numbers.
These are effective strategies, and once you thoroughly understand how they work – then you may have a fundamental change in perspective about where the real estate investment opportunities are to be found during this time of crisis and opportunity. You may achieve a dual change in perspective that will have you seeing two levels beyond your competitors, and this enhancement to your current situation could alone have the potential to deliver personal benefits to you that are many, many times the cost of this workshop. However, while the essence of these “outside-the-box” opportunities can be described in a relatively short period of time, the optimized application of these strategies – and the trade-offs involved with various decisions – are not necessarily intuitive; instead there are some quite complex considerations involved.
We will therefore go to another level still, and explore dozens of possible futures using more sophisticated tools and analyses than we did in the book and course. Supported by over 150 pages of detailed financial modeling, we will explore how monetary inflation, inflation taxes and asset deflation work together with real estate investments in today’s markets, which factors control them and in which situations, and where the pockets of opportunity for gaining net worth on an after-inflation and after-tax basis can be found in a market in turmoil. In the process of this exploration, you will come to see more clearly than ever where the opportunities are, where the dangers lie in wait, and how you can alter your strategy to maximize your upside potential while anticipating and controlling your downside risks.
As we explore, we will ask: which opportunity should we choose? The strategy of buying before the price bottom, or the strategy of buying afterwards? Our answer will be both. Because the two opportunities may occur years apart, and their sources of wealth are found in two quite different places. One strategy is based upon finding the optimal investment point to capitalize on monetary inflation, and one is based upon the optimal point for capitalizing on asset deflation. For while monetary inflation and asset deflation both work together to bring down investor wealth in general terms – and while each provide pockets of opportunity – they are separate forces, operating on different cycles, as further discussed in the next section on long term investing.
There will be extraordinary amounts of money made – and lost – in real estate over the next several years. There will be few places where the interaction of monetary inflation, asset deflation and inflation taxes will be more significant. There may be no place where a lack of understanding of these governing principles could be more expensive. The place to take your knowledge of these principles to the next level, and then the level beyond that – is the Turning Inflation Into Wealth Workshop.
It should also be noted that this part of the workshop may be quite valuable for people who aren’t necessarily interested in investing in real estate at all. For in addition to exploring a specific, current opportunity, our exploration will also constitute our most detailed case study of how the three forces interact – and the lessons for identifying dangers and pockets of opportunity carry forward into many other asset classes as well as other situations.
3) Long Term Investing & Retirement
Our three forces of Monetary Inflation, Inflation Taxes and Asset Deflation share something else in common – the worst of their effects are reserved for retirees and long-term investors. Indeed, the economic impact of each of these forces is to systematically redistribute wealth away from savers and investors, in favor of those who are currently in the workforce.
Conventional financial planning models for retirement generally come down to one thing – the power of exponential compounding (even if those exact words appear nowhere in the plan). Whatever the asset particulars – and whether we refer to our income source as interest, dividends or capital appreciation – we assume that the value of our assets will compound to the point that our reinvestment income exceeds our annual contributions, and that this reinvestment income will continue after retirement. Indeed, in the 17 year expected average lifespan after age 65, retirement financial planning typically assumes that our investment income after retirement will substantively exceed the sum of our savings contributions before retirement. It has to – those are the “magic” equations that make the whole industry work. Then there is that footnote about needing to plan for inflation, which often then leads to a recommendation to keep some assets in stocks.
As we covered in the readings, the combination of inflation and inflation taxes are anything but a footnote. Indeed, with even a 25% combined state and federal tax bracket, and 7.5% inflation (the January 2008 12 month PPI was 7.4%) – there is a very good chance that the combined costs of inflation and taxes will reduce our real income to less than zero. In other words, the economic reality could be that with a conventional investment strategy, there is no after-tax and after-inflation income after retirement. In real terms, living expenses might all come out of principal from day one, which would have the effect of slashing what our actual lifestyle works out to be, perhaps by 50% or more (depending on your assumptions).
These issues are then worsened by demographic factors. For the generation that buys together – sells together. Not all in the same day or the same year; indeed, on average the oldest Boomers will have passed away before the youngest Boomers reach traditional retirement age. However, in general there has been substantial asset inflation across almost all asset classes since the bulk of the Boomer demographic bulge hit the work force, and this asset inflation generally increased as the Boomers hit their peak earning years.
The more people who buy at the same time, the higher the prices tend to go (which creates a positive feedback cycle, that then sends prices still higher). We’ve seen this rising tide (and we are still seeing it) with stocks and real estate, each of which are trading at much higher inflation-adjusted levels than they were 25, 30 and 35 years ago (even after the setbacks of recent years).
The problem is that “high tide” is already here, and signs are growing that it has started to recede. (And tide it is; for this is no dramatic tsunami that comes and goes, but a generational pressure that will build relentlessly and unstoppably over the next two decades.) As 4 million more Boomers retire each year, and shift (on average) from buying assets to selling assets, even as their public and private pension plans shift from buying to selling assets, there will be powerful deflationary pressures hitting most of the asset classes that Boomers have been buying. Which is then all too likely to lead to negative feedback cycles that may eventually take asset prices in real terms to the lowest levels seen in a generation or more. Levels that may be far lower in real terms than we are seeing today, even if monetary inflation creates the façade of quite attractive (and taxable) compounded income.
Put it all together – and we have a problem. A three way convergence, with Monetary Inflation, Inflation Taxes and Asset Deflation each posing formidable individual challenges to retirees and long-term investors. Put the three together – and the challenge will likely prove impossible to overcome for most (but not all) people planning to live off of investment portfolios during retirement.
That doesn’t mean that some single catastrophic event will wipe out people’s savings, with huge headlines about what has happened. That could happen, but what is more likely is a long diminishment – a long squeeze – where tens of millions of people systematically lose their ability to enjoy the lifestyle they had planned. An unstoppable process where the symptoms are described by the newspapers as they develop, but the big picture is never seen by most – not until it is too late.
This is not just a Boomer problem. If you are 62 or 72, then that receding tide will be pulling purchasing power away from your portfolio and standard of living just as it will the older Boomers. If you are 25 or 35, then you run the danger of making investments for the long-term whose value will never make it into the long-term.
What to do about it? Can you defend yourself? Can this fundamental type of problem even be turned into profits by an individual?
(This is probably a good time to mention where the Turning Inflation Into Wealth series came from. It’s roots are within the long-term investment dilemma of finding ways for individuals to move against the tide of their own generation, to overcome the fundamental issue of “the generation that buys together, sells together”, across almost all asset classes. I’ve spent nine years researching and developing this body of work, with the inflation segment taking about one year out of the nine.)
The short answer: yes, you can protect yourself and prosper. But you have to get out of step with 50 million Boomer investors (and pensioners) to do so. This “getting out of step” is much easier said than done, and requires exiting the conventional financial planning box, so to speak.
Specifically — how do we support our lifestyle through selling assets over the long term, while getting out of step with 50 million other asset sellers planning on doing the same thing, either directly or through pension portfolio sales?
In the workshop we start with education and perspective, and then we will move on to some answers. You will receive about 250 pages of written information (these are not included in the mini-course or “The Secret Power Within Your Mortgage”) that will be devoted entirely to the issues of long-term investing during a time when generational pressures are forcing down both the value of money and the value of assets.
We will review how we can apply the Inflation Into Wealth principles – and then move beyond those strategies to discuss other essential methods for protecting ourselves from the upcoming decades of likely diminishment. We will integrate the demographic issues with our earlier treatment of asset deflation and monetary inflation, look to the fundamentals of people acting in their own self-interest, and find something extraordinary. By deliberately and systematically moving “out-of-step” with those around us – we may have the opportunity to realize some of the greatest real investment profits of our lives. It will all be in the timing and asset allocation.
Learning and understanding the interaction between the various forces in play will be the irreplaceable first step in turning peril into opportunity – and delivering that understanding is the goal of this section of the workshop.
Other Workshop Topics
In the process of taking an intensive look at hidden opportunities in the real estate market, we will be learning tools and principles for dealing with the combination of Asset Deflation, Monetary Inflation and Inflation Taxes. This is highly valuable information if you are a real estate investor – but may be just as valuable to you if residential real estate is not your investment choice. Because the same principles and tools also apply for such alternative tangible assets as precious metals, farmland, energy and overseas real estate.
We will discuss how each asset class has its own cycle for asset inflation and deflation, its own advantages and disadvantages for monetary inflation left hooks, and how the best strategies over time aren’t about any one strategy – but making the right shifts between strategies at the right times. We will learn modifications to the real estate model that create specific and attractive strategies for alternative tangible assets, and about the domestic and international forces that are coming together to create multiple pockets of opportunity.
We will update the potential for Inflation Arbitrage. This entails looking at current inflation and borrowing rates on a before and after-tax basis, as well as discussing economic and asset reinvestment considerations.
We will focus on building “skewed” strategies, where the upside potential is substantively higher than the downside exposure. There will be a discussion of how to combine liability and asset in such a way that losses are short term and minimal if inflation dangers do not materialize – but with profits that will steadily accumulate over the years (and potentially decades) if substantial inflation does dominate the years ahead.
We will talk about increasing the effectiveness of inflation “tax shelters” through working with differential timing on asset and liability income / expense recognition.
We will explore some of the possible integrations between current food riots around the world, inflation, Baby Boom demographic issues, government finances, the rise of Asia, and the possibility of Peak Oil in the coming years. We don’t have a crystal ball, but the continuation of certain trends seem all but inevitable. By thinking a bit outside of the usual investment “box”, we will connect these factors to uncover some nicely skewed alternative strategies for those investors who can anticipate the interrelated effects of these fundamental global forces.
DISCLAIMER
Please note that the workshop will be of a strictly educational nature, rather than the rendering of professional advice. The future is uncertain, and there are no guarantees or promises of success or particular outcomes. As with any financial decisions, there is a risk that things will not work out as planned, and with hindsight, another decision would have been better.
The workshop will not include specific investment, legal or any other form of professional advice. If specific advice is needed, it should be sought from an appropriate professional. Any liability, responsibility or warranty for the specific results of the application of the general educational principles contained in the workshop and the written materials, either directly or indirectly, are expressly disclaimed by the workshop leader.
