Top Money-Making Investments for 2023: Economic Megatrends for Investors – Part 2 | Aspen Funds
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Top Money-Making Investments for 2023: Economic Megatrends for Investors – Part 2

This episode is part 2 from Bob Fraser and Ben Fraser’s presentation “Top Money-Making Investments for 2023: Economic Megatrends for Investors”. Find out how you can leverage global demographics, energy, inflation, and interest rates to maximize your oil & gas, commercial real estate, and housing investment portfolios in 2023.

Download the Slides https://www.investwithaspen.com/hubfs/March%202023%20Webinar%20-%20Top%20Money%20Making%20Trends.pdf

Connect with Bob Fraser on LinkedIn https://www.linkedin.com/in/bob-fraser-22469312/

Connect with Ben Fraser on LinkedIn https://www.linkedin.com/in/benwfraser/

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Transcription

Ben Fraser: Hello, Future Billionaires! Welcome back to the Invest Like a Billionaire podcast, and today we’ve got part two of the top Money-making investments of 2023. So if you haven’t listened to the episode before this one, you gotta stop, go back to that episode. This is a continuation of a presentation that Bob and I gave just a few weeks.

From the top money making investments of 2023. And we’re talking about the stimulus, how that’s impacting inflation, where the consumer is at, and uh, where the real estate is at currently. And today we’re gonna dive into the top investments, the actual specific opportunities that we’re seeing in the market that we think are gonna be the best ones for 2023.

And, uh, hope you are enjoying this episode, and I think you’re gonna get a lot out of it. So tune in.

This is the Invest Like a Billionaire podcast, where we uncover the alternative investments and strategies that billionaires use to grow wealth. The tools and tactics you’ll learn from this podcast will make you a better investor and help you build legacy wealth. Join us as we dive into the world of alternative investments, uncover strategies of the ultra wealthy, discuss economics and interview successful investors.

Ben Fraser: looking for passive investments done for you. With Aspen funds, we help accredited investors that are looking for higher yields and diversification from the stock market. As a passive investor, we do all the work for you, making sure your money is working hard for you and alternative investments. In fact, our team invests alongside you in every deal, so our interests are aligned.

We focus on macro driven alternative investments. So your portfolio is best positioned for this economic environment. Get started and download your free economic report today​

Bob Fraser: So I’m gonna hit now the four mega trends.

These are the things that we pay a lot of attention to that, that, that are gonna drive the future. The first one, nobody go to sleep on me here. Okay. It’s demographics, right? This is the snoozer of snoozers, but it’s really not. Demographics are like, if the, if the federal governments and the central banks are the 800 pound gorilla of the economy, demographics are the 8,000 pound gorilla of the economy, right?

These, they, they, they. Of central banks, quake and Trumbull. I mean, yeah, demographics are a very, very big deal. And the reason is this demographics is the pop changes in population and the reason it matters. So, you know, if, if I started a country and it would be, and I’m making a hundred thousand dollars a year, well then my GDP of my country is a hundred thousand dollars.

Now let’s say I invited Ben to be a part to join my country and he’s making a hundred thousand dollars. Well then I just doubled our gdp. Our GDP is now $200,000. Now, if I got tired of Ben and I said, you know, you’re no longer a part of my country, my GDP would drop by half. So in fact, population is, is gdp is population times productivity Per population.

Yeah. So if, if populations are changing. Uh, we’re gonna see, uh, economies radically, radically shift. And we are seeing massive changes in, in, in the economy. And we’re actually seeing, this is from the United Nations. This is our population database. And this is, this is developed nations, and we’re seeing this is where we are today.

We’re seeing populations are going to be declining, um, of developed nations. And, and what’s more than that is we’re seeing, uh, the 25 to 64 age group dramatically declining. And what, what, why does that matter? Well, that’s called the working age population. Those are the people who work and they produce things.

And so we’re seeing workers basically gonna, you know, you know, disappearing in a, in a, in a large way. It’s, it’s worse in places like Europe. And, and I’m gonna, I’m gonna skip that. And hit on China. So, so this is, this is nuts to know what’s happening here. So this is the next 75 years, this is the population of China, and we are basically gonna see a 50% decline in the population of China over the next 75 years.

Okay, now you don’t think that’s gonna change everything on the planet? You’re not, you’re not, you’re missing something. Okay. And, but not only that, you aren’t seeing the workers. Drop by a faster rate by two thirds. So literally two out of every three workers will no longer exist in China in, in 75 years.

And it, and it’s, it’s starting now where actually see Pop China’s population has actually peaked and they’re in a very, very unique situation. Number one, they actually threw their, through their one child policy over 350 million forced abortions. And, and it, and it’s, and it’s worse than that. The, the fertility rate is actually measured as children born per woman, right?

Mm-hmm. . And you need 2.1 just for a, for a population to stay even 2.1 children born per woman. The Chinese are at 1.15 right now. Yeah. They’re not even close to just, they’re actually going to, they’re guaranteed to continue to go down in young people. And it’s worse than that because this one child policy favored men.

Right. They have less women. And so it’s just this double whammy add to the fact, add to that the, uh, this urbanization rapid urban urbanization, which now children in an urbanizing economy, children become a burden rather than a rural economy that children become labor. Um, so we’re seeing a massive change.

And, and this is gonna change everything about everything. Is China gonna be able to continue to be a manufacturing power in the world with one third of the workers available? Probably not. Yep. How many more apartment complexes are they gonna be needing? You know, how many more roads, how many more hospitals, and, and all of this changes everything.

Yeah. So we are gonna see a massive shift in the entire planet during some of your lifetimes and certainly during some of your children’s lifetimes. Um, one of the most surprising things, Is the United States and you actually see, you know, um, you know, the United States population continued to gradually increase according to the un.

Now the shaded areas are kind of confidence level, so it could go this way and it could go this way. Mm-hmm. based on the data, and this is because we don’t owe tomorrow how many kids. Right. They’re gonna have. Right. Um, it’s interesting, in China, they actually can predict, we know exactly where this is gonna be.

There’s no shaded area, there’s no, we know exactly what their population is gonna be, you know? Interesting. So, so very different. Um, so, but in America we are seeing the population, uh, that is actually gonna continue and the working age population continue to be fairly strong. Yeah. You know, one of the other, other interesting things about this demographics, going back to China, you’re actually seeing this is the 65 plus age.

and you’re, you’re seeing this is the retired age people mm-hmm. , that there’ll be more retirees than actual workers. Um, and so this is one of the things as, as the, as the world ages, right, as we get better, we extend lifespans while people just get older and they, and they don’t die, and they keep, okay, keep on.

But, but it actually creates a, a, an inflationary pressure. So for every working person, that working person is supporting two people, you know, him and a retired person. Does that make sense then? Yep. And so, and you only, only one is working, one person working, two people eating. Um, so it’s, it’s just inflationary.

Um, so we’re seeing a pretty massive change in, in the world. And, uh, and, uh, you know, and going back to this chart I showed earlier, I showed this is the, this is the participation rate. Remember I said the, the percentage of the population in the workforce. And remember we saw this big drop here during covid of people exiting the workforce.

And, you know, a lot of that was, you know, stimulus related. But then BlackRock came out with this chart and showed the contribution of aging to the decline in the participation rate. And that’s this, this cyan line there. And, and so we see so much of the reason that people haven’t come back to work is this people have retired due to age.

Mm-hmm. , they’re just, they used covid as an excuse to get outta the workforce and then they just never bothered to go back. And we also saw the worker shortages happen. So this was, this was wage growth, you know, uh, worker shortages, spiking wage growth, though again, we’re seeing that happen. Alright, so, and case in point, case in point, um, he here is more, more China, China data.

So we’re seeing this is, this is the average wage in some countries. So this is, uh, you know, this is Thailand, here’s Mexico, the green. Look at the wages in China. Look at the wages in China. That’s the red one. It’s gone up 15 times since 1999. Wages in, in China. It’s the fastest labor appreciation in human history.

Um, and so one of the things that’s gonna happen, or several things that are gonna happen because of the demographic changes, we are gonna see high wage growth as a norm. Where because there’s fewer workers, that means there’s low supply. We’re gonna see inflation because there’s. Two consumers for every producer for instance, we’re gonna see higher taxes and pension costs.

You know, so be a social security and Medicare, uh, for instance have to, you know, paying for the retired people in, in medicine cuz old people are better, bigger consumers of, of healthcare. Um, and so we’re seeing higher taxes and pensions costs, get ready for it. This stuff is just gonna go up. Yeah. Um, and, but it’s actually far worse in, in Europe, Asia, and China.

I mean, you know, the numbers coming out of, for example, Italy are insane. Um, I mean the number of retirees, there’s virtually no young people and there’s virtually entirely old people. It’s like a, it’s like a nation that is a giant retirement home. Mm-hmm. . And we, we have no models for this. We really don’t know what is gonna happen to a nation like that.

There’s no workers, there’s no, nobody’s paying taxes, nobody’s working, everybody’s consuming. So we don’t know what’s, what’s gonna happen. Um, we’re also seeing changes in the capital markets as the baby boomers, uh, baby boomer regeneration is, is retiring these days. And what that means is we’re pulling their capital that they’ve accumulated over the last few decades out of the markets that’s gonna increase capital costs, increase lending rates, and, and, you know, and change the stock market.

Mm-hmm. as people are pulling out of the stock market, et cetera. We’re gonna see negative stock market growth and then negative GDP growth in many countries. Again, if you see your population going down by half, you’re gonna see GDP drop by half now, and the only way to compensate for that is doubling your productivity, which, you know, I know we will see increases in productivity.

Right. But you know, that much, I don’t know. All right. Uh, megatrend number two. So biggie, biggie is the demographics. It’s gonna drive everything. The other big mega trend that we’re paying a lot of attention to is energy. Now were you 

Ben Fraser: gonna hit this one? Yeah, I was gonna hit this one. And before I do, just wanted to, uh, make a quick note that the end here, probably about 10 minutes or so, we have, uh, Few minutes for q and a.

So if you have some things going through your mind, you wanna, uh, get our thoughts on it, just put it into the, into the chat and we’ll hit those here soon. But energy, this is another trend we’ve been talking about for a while if you’ve been following us, but, um, in 2014, uh, we kind of saw this new energy narrative really become dominant, right?

And that was basically that fossil fuel, uh, demand had peaked and there’s no more need for fossil fuels. The green energy revolution was gonna take over. And, 

Bob Fraser: and we saw at the end of the Obama recession that long, you remember a recession from 2009 for the next 10 years, just kind of really slow growth, right?

Well, right. Without high demand. There was not high demand for oil and gas and add in the conservation efforts. And we saw energy demand plateauing, right? So it looked. Hey, we’re we’re done with 

Ben Fraser: fossil fuels , and because of that, we actually saw massive declines in investment into finding new fossil fuels, hydrocarbons, oil, and gas.

And so since 2015, we’ve seen a decrease of over 50% of, uh, capital expenditures back into finding more resources. And that’s a big problem in oil and gas because these are depleting resources, right? There’s a fixed amount in the ground. And so if you stop exploring and producing more wells, that’s gonna decrease over time.

So what’s happened is we have, you know, initially saw this kind of slow down in demand, but. All of a sudden, especially last summer, we saw kind of the, we think the early innings of this where demand kind of had a, had a surge. And you can’t just turn supply on, uh, you know, right, right away. It, it takes many years, right, to develop the, these basins and these wells.

And so, um, what we’re seeing is there’s a systemic decline and constraint, uh, constraint on supply. And we don’t think that’s gonna change anytime soon. Um, meanwhile we’re seeing, uh, demand is actually pretty strong for 

Bob Fraser: energy, right? Yeah. Post covid, demand spiked, and all of a sudden prices. Take this jump.

Right? And then of course, you know, Russia happens. Uh, yeah. But before that, it was when the prices spiked, and there’s a 

Ben Fraser: lot more we can’t get into right now, but we’re, we’re seeing a lot of challenges in the ESG movement with this transition. A lot of, you know, the, the, the stated metrics we need to hit too.

What is ESG movement, , environmental, societal, and, and governance. So these are really the, you know, kind of big pillars of the green energy revolution and pushing, um, kind of green energy, which, hey, we all wanna transition to that, which is great. But the, the, the challenge is there’s, there’s some fundamental, um, you know, supply challenges and the resources needed to achieve these goals.

And it’s not gonna happen anytime soon. So what was the number you said the other day where the EIA projected, uh, By 2050, there’s still, I think 70% of the energy usage was gonna be fossil fuel was still gonna be fossil fuels. Yeah. 

Bob Fraser: 30 years from now. Even if that’s, if everybody met their goals. Right. 

Ben Fraser: If all will be hit.

So a little outside of this, this topic, but you see here, Goldman Sachs, um, they’re projecting, uh, oil prices of 140 a barrel. That, that’s about double of where we’re at right now. Um, and you know, some of the, just read some of these little snippets here. Oil, oil inventories are at record lows. And to rebuild those inventories, to create enough incentive to go out and, uh, produce more, the, the pricing has to go up.

Um, to, uh, uh, rebuild those inventories. Supply remains inelastic to higher prices. What does that mean, ? Well, inelasticity is, um, you know, if, if there’s, uh, more demand, right? That’s, uh, there may be a, a little bit of tail off of, of, uh, of what’s being used by consumers. But you can’t all of a sudden turn on more supply.

And so, uh, more demand is going to massively increase prices because supply cannot keep up with that. So 

Bob Fraser: higher prices are, are, won’t mean more oil. Yep. , that’s what it meant. That’s 

Ben Fraser: what they’re saying. Exactly. And then this other, other big point here is that an economic slow down will not end the shortage, right?

So a lot, a lot of people are, are saying, well, if we’re go into recession, demand’s gonna go down. Well, yes, in the short term, but we’re still have this, these supply constraints. And, um, as soon as demand picks back up and again, Are we hitting recession? It’s anyone’s guts at this point. Um, and so the, the, the market for, um, uh, you know, oil and gas, we, we think is gonna be in a, a long term bull market for the next several years.

And many economists would agree with us on that, 

Bob Fraser: right? So, so basically what I’m seeing is supply doing this, you know, down into the right. And, and that’s, as long as demand oil demand is below that, we’re not gonna see a spike in oil prices. And so, so the, the government slowing down, um, you know, through, through the raising the rates, other things, you know, is keeping us from bumping.

But as soon as we see any kind of recovery, you’re gonna see a spike in oil, in oil prices and Right. This is actually, and this may, this may, we have a, you, this is a great buying opportunity for oil and gas. We may have a good year, or our prices continue to be low in oil and gas. I mean, we’re seeing gas prices hitting, you know, $2 in the $2 range, and it’s just a great time to be investing.

So this is really one of our number one investments. . 

Ben Fraser: Yeah. Megatrend. Number three, persistent inflation. Right. So this is something that we’ve been saying for a while and it seems to be other economists in the Fed is, you know, kind of changing their tune to inflation being transitory or short term to potentially being very persistent and stubborn.

And so if you kind of really break down, you know, what the, the causes of the c p or inflation increases are related from, um, it’s energy is one of the biggest ones. You know, so, and supply chain initially was one of the largest ones, but that’s being solved and we will, you know, decrease 

Bob Fraser: if, if, if you actually break down the gains in cpi.

Most of the, of the rise up in consumer price index has been due to, um, energy and most of the easing of inflation in the last few readings have been due to an energy price reduction. . 

Ben Fraser: Yeah. And in addition to that, we’re also seeing the worker shortages, right? So we’re seeing, um, very, very low unemployment, and that’s driving real, real income gains like we saw earlier.

But it’s creating a very big issue, um, for businesses that need workers. And so this is very inflationary, right? If there’s less workers, they can demand more, more wages. And that puts pressure on an inflationary pressures on businesses. 

Bob Fraser: So what we’re seeing here is that inflation is gonna be very difficult to contain with moderate GDP growth.

Okay. Why? Because there’s a problem with energy and there’s a problem with worker shortage. Yep. Okay. And they’re, they’re not cyclical. They are systemic. Yep. And so, so, you know, that’s the problem here is that, that we’re gonna see inflation is gonna be very difficult to fix. And that, that, that we, we, we hit, um, you know, a real rub here because now this is an actual quote recently from Fed chair Jerome Powell.

I’m gonna actually read this. Okay. Word for word, because I want you to understand what he is saying. Okay? And this is an interview, he said, changing our inflation goal. Now the inflation goal is 2%. That’s their target. They want to have 2% inflation. It’s just something we’re not, we’re not think about.

And it’s not, we’re not going to think about it, it’s it. We have a 2% inflation goal and we’re gonna use our tools to get back to 2%. I think this isn’t the time to be thinking about that. I mean, there may be a long run project at some point, but that’s not at all where we’re at. We’re at the committee.

We’re not considering that. We’re not going to consider that under any circumstance. We’re going to, we’re gonna keep our inflation target at 2% and we’re not, and we’re gonna use our tools to get inflation back to 2%. Now, does, does anyone doubt that he is locked in to 2%? Here’s the problem. I don’t think 2% of inflation is achievable because of the worker shortage.

That’s, that’s systemic and because of energy costs. So this means the fed may overshoot in their effort to reach the 2% goal. So they may cons push too hard and we’ll see how what happens. Yeah, this 

Ben Fraser: is a real quick chart. We’ll spend a lot of time on it, but basically shows the effects if you, uh, with inflation at 8%, right?

If you compound 8% over 10 years, values. And the cost stuff just 10 years in just 10 years. And so, you know, the, what we’ve said so many times on the podcast and other presentations is inflation is not neutral. You need to get on the right side of inflation, right? And it’s a massive transfer of wealth from savers to borrowers, right?

And so it’s something you need to be thinking about. Are you positioned to benefit from inflation? So go to the next slide here. This is a really interesting chart on inflation winners and losers by decade. So you can see, um, you know, there’s different asset classes that generally perform pretty well, um, in inflationary environments.

And the last kind of period of high inflation that we’ve had in, in our economy was in the 1980s. And so you can look there and that, and 

Bob Fraser: that bar chart there. So, so the red is inflation, so you can see where inflation is at here. So the seventies and eighties, so, you know, and then the green is housing.

The blue is commercial real estate. The gold is gold. And the, the light blue is a stock market. . So here’s the 1980s, the high inflation, while housing did super well and so did commercial real estate, gold actually lost money. You know, so this, this idea that gold is an inflation hedge is really not true.

It’s not been true over this is, this is the last five decades, right? You know, so, um, and gold did super well in the 1970s, but that was only because it was pegged at $35 announcement, you know, before 19 at 1971. So, so big, big winners are housing, commercial real estate and stocks. Yep. Megatrend number, number four.

And this is a big deal. It’s a big deal. So this is 1980. Anybody remember? 1980? You know, I do , good years and in, you know, interest rates, 14%, you want to borrow money to buy a house, 14% interest rates. That was normal. Well, um, and look what’s happened over the, since 1980, you know, uh, you know, 40 years. Look what’s happened to interest rates.

They’re, they’ve been going down. And what that means is that you can, you can borrow and buy something, you can refinance it later, you get at a lower interest rate. That lower cost gives you higher profits as an investor and your, and then that allows you to make prices debate more and prices rise. You see this, this virtuous circle.

Mm-hmm. right? Going this way, right? And, but what’s happened here? Look at this. It’s suddenly ticking up. Is this breaking trend? Are we gonna see interest rates actually sustain higher, higher, higher rates? I do believe we will. Yeah. And, and again, I’m going back not just to inflation, but I’m going back to demographics.

This is the baby boomer generation, right? Deploying their capital into the stock market, into the bond market, et cetera, to drive down rates, make the stock market go up, make yields go down. And as they start to retire and pull money out, I believe we will see capital costs increasing. Now, I’m not, I’m not a doomsayer, I’m, I’m not predicting high, high rates, I’m, I’m predicting more nominal rates.

I think we’ll see normal rates, you know, let’s say between four and 6%, you know, for, for a mortgage, that kind of thing. All right, last section. So where last section you make money? Anybody wanna make some money? All. Number one opportunity that our number one opportunity on our radar. You want to hit this?

Ben Fraser: Yeah. I mean, it, it kind of ties into the megatrend, right? So it’s, it’s a sector that’s been very out of favor because it’s had a lot of volatility. It’s kind of been, you know, the, the, the, the dirty business of oil and gas. But, um, it’s right now what we’re seeing in some of the deals we’ve done last year and what we’re seeing on the horizon right now is you, the, the value for what you can get is, is pretty incredible.

And it’s amazing. If you think about the up potential upside, which they’re on sale right now, which we think is there, um, it’s, it’s, uh, gonna be pretty incredible. So we think this is one of our number one opportunities. Pay attention on top of that, there’s amazing tax incentives like real estate, but even better.

Um, and so it’s something we’re really focused on. Yeah, 

Bob Fraser: you wanna, you wanna buy stuff when it’s outta favor. Yes. And you want to sell stuff when it’s in favor, you know, back, you know, a year ago if you. Invested in Bitcoin, you’re telling every cab driver is telling you about their Bitcoin they’re invested in today.

They’re not telling you that. You know, and, and you know, um, you know, it’s the same with oil and gas. It’s a very out of favor sector. People don’t want to be in it, and it makes the discounts just insane. And that’s the time you wanna be buying stuff. . 

Ben Fraser: Yeah. So this, this one’s interesting. So opportunity number two is distressed commercial real estate.

And so we showed the, the chart earlier that delinquencies were very low in commercial real estate, but this is what’s kind of brewing on the horizon. And so Fitch, uh, which is a ratings agency, has rated, uh, the, the kind of CMBS loans that are coming due this year. So CMBS is commercial mortgage backed security.

So these are, uh, commercial mortgages that have been packages and sold. And they’re looking at of the, the loans that are maturing this year loan, that, that means 

Bob Fraser: they borrowed money a while back. Yep. And now 

Ben Fraser: the loan is due. Yep. The loan is due. Well, you think about a couple years ago when these loans originated, interest rates were a lot lower.

How, how, like what, uh, they were, you know, in the, in the three and 4%, right? And now we’re seeing commercial real estate, uh, loans in the six, seven, 8% range. And so it’s basically double. And so what, what they’re, they’re showing here is that 23% of the loans that are maturing will not qualify this, this year in 2020.

Will not qualify for a refinance. Meaning that the, based on the current, uh, operating income that they have of the property, they could not support the increased debt service if they have to increase their, their interest rates when they refinance the loan. That’s, uh, a pretty big yellow flag in the market,

Um, but as investors, you know, great opportunity, great opportunities, so we’re keeping an eye on that. And this, we think this is probably gonna be something that’s really gonna be more realized in 2024, but pay attention to what’s on the horizon 

Bob Fraser: here. Yeah. And here’s a case in point. The CHE group just just announced the, yeah.

$481 million default on 43 properties. 8,600 apartments acquired in 2019. It’s a maturity at fault. Yep. They just, uh, went into what’s called special servicing. You know, and so they’re end up gonna be selling and, you know. Yep. Um, so we’re gonna see great opportunity buying stuff. That is great. Got great fundamentals.

Yep. And, but you just get it on, get it on sale because of the, uh, the financing opportunity. Um, you hit this one too, Ben. 

Ben Fraser: Yeah. So alternative, uh, commercial real estate lending. So this is something where, again, we showed earlier that commercial, uh, lenders are pulling back in the market, right? So, uh, that, you know, the, the first, first lean position, the, the, the banks that were.

you know, lending at 80%, 75, 80% just a year or two ago, they’re now in the kind of 60 to maybe 65%. Well, what is that doing is kind of creating this, creating this, this gap in the capital stack. And so we see that there’s some real opportunities in these kind of, you know, mid-cap stack positions where as, as a, you know, bridge lending, mezzanine lending, um, and, uh, you know, preferred equity.

And so a lot of these, these projects that are good deals, They’re not getting funded because the banks aren’t, um, you know, underwriting them in the way they were before. And so there’s opportunities, uh, we think where there’s, you know, strong fundamentals in a good market and a good property, uh, to come in, in a more senior position to common equity, um, but kind of shore up that 

Bob Fraser: gap.

Yeah. Our fourth opportunity is commercial real estate. We think it’s an incredible time, but we, we, we don’t like certain sectors. We’re not liking office and we’re not liking hospitality right now. Now they, they may be all right, but it’s just not, not for us. Our favorite sector, number one is industrial.

We’re gonna hit that in a sec. Our second is retail. So retail as sword through covid. We love retail and look at retail sales people are, you know, people are scared of investing in retail right now. And what’s what that, what that means is that the prices are insanely cheap. And so it’s perfect. It’s perfect when, when reality doesn’t, doesn’t match, uh, kind of, uh, the narrative.

Yeah. You know, then that’s the time when there’s a huge opportunity to either buy or sell. Yeah. Banging which sides you’re in. Self storage. We love that. It’s been just this kind of amazing asset. It doesn’t matter, just goes through recession, you know, uh, Americans love their storage, um, and multi-family, and we showed you the chart that showed this incredible demand for multi-family.

There’s just, there’s a, there’s a shortage of housing and, uh, multi-family is a great place to be. Um, hit industrial here, Ben. Yeah, 

Ben Fraser: so industrial, I mean, we just don’t have time to go into all this, but it’s, it really plays into this de-globalization trend, right? So as we saw, China’s, uh, cost of labor has gone up 15 x, right?

That, and many other factors are driving manufacturers to want to move manufacturing. Back to the US and they also want to reshore inventory, right? They all had experiences with these supply chain crises, um, during covid where it was difficult to get, you know, critical components to finishing the manufacturing process and they couldn’t, can’t sell inventory.

And so, you know, how valuable is it for these, um, companies to be able to bring that back control, that that process, um, alongside energy is one of the other biggest drivers of this, right? So energy, especially in Europe where they don’t have, they’re not energy independent, they don’t have their own natural resources.

Um, energy is, is a big wild card and an input cost 

Bob Fraser: into manufacture. I mean, Europe right now gas, natural gas is five times more expensive than in the United States. So if you’re, if you need natural gas, if you’re an industrial production company, you need, you need energy. Yeah. There’s only one place in the world to.

Ben Fraser: Yeah, so you can see on this chart here, this is the number of, of jobs in manufacturing or the reshoring. Um, coming back to the us we just had a economist down on the podcast just the other day saying that there was $1 trillion of reshoring activities that happened just in 2022. And this is just the beginning stages.

This is, this 

Bob Fraser: is a gonna be, this is a 20 year mega trend. We’re gonna see de-globalization. What that means is, in the past, Everything was all over the world and everything was just shipped around and supply chain spanned to the globe. We’re seeing the end of that. Yeah. And we’re, we’re seeing, we’re seeing trade as a percentage of GDP is actually reversed.

So for the first time since 1945. Yeah. And so we are, and we’re gonna continue to see it. So the world has underpriced the supply chain risks, and they’re now, it’s now being repriced. And you’re, you’re seeing a massive amount of reshoring coming on. And this is not a small trend. This is a very, very big trend.

You’re seeing vacancy rates, hitting record lows Yeah. Throughout the 

Ben Fraser: United States. Yeah. So we, we’ve recently, you know, completed, uh, the, the raise on project. We have several more on the pipeline and, uh, so this is an area that investors want to get exposure to if you don’t already. 

Bob Fraser: And housing. We continue to see, uh, uh, basically housing shortage in the United States and that that’s gonna oscillate between single family homes and multi-family.

So I love this chart from Marcus MEChA, shout out to, to those guys. They do great research. Um, so this is, this is the, the mortgage payment for a, for a home. This is the average rent for an apartment. And you look at that, they track together. So if, if they get far apart, you see prices come down of homes and, and, and they, and, and apartment rents go up and Oh, yep.

And they just continue to track. If people have a choice, they’d rather own a place. Makes sense. But all in all, what I want to point out here is that, and we’re likely to see prices, home prices come down a bit and, and apartment rents go up to meet them a little bit. Um, but overall, here’s the point you want to take away from this.

We’re gonna see housing go up, get multi if you don’t know which to do, do both. You know, cuz they are going up. There is a shortage of housing in in America. 

Ben Fraser: okay with that. Wow. I think we hit it on, on the money, on the, on the timing here, we will take a few more minutes just to, to take a few questions. If you guys have questions, please put them in the chat now.

And I just wanna, wanna say, you know, if you like this information, you wanna get more of it and you’re not already on our mailing list, um, please do a sign up. And, uh, also we have an investor club. Um, so if you wanna get notified of investment opportunities as, as they come available, uh, please sign up for that as well.

Um, so we have a few, few questions here in the chat. And again, if you have, uh, more questions, feel free to put those in. We’ll try to answer a couple of these, uh, just for the next, about five minutes or so. Um, so we’re seeing here, um, Cash savings. Do we know how that’s, uh, so that 5 trillion of excess cash, it was, was there any breakdown demographically of kind of a age group?

Um, now this 

Bob Fraser: is kind of in total, it’s a bit of a mystery, you know? Yeah. I think a lot of it was the stimulus. A lot of it was P p B loans. A lot of the, you know, and I’m sure you know, like most of the demographic was probably the, you know, you know, the 1% get more of it, um, is typical, but yeah, there’s no breakdowns.

Yeah. That 

Ben Fraser: I’ve seen. Okay. Another question is, um, how can investors productively deal with continued K shape recovery, political sentiment against wealthy risks of wealth, uh, tax and extreme regulation? ? 

Bob Fraser: Nah, nah, that’s a good, good question. I mean, you know, I mean, we’re definitely seeing, you know, in, in, uh, uh, democratic societies, you know, where everyone has a vote.

We’re, we’re, we’re seeing people voting and wanting more equality and wanting, you know, the one, targeting the 1%. And, you know, I, I think that trend is probably gonna continue, you know? Um, and you’re gonna see more and more, you’re seeing a wealth taxes being talked about, you know, you’re looking at, you know, uh, you know, wonderful Gavin Newsom is talking about, you know, um, uh, taxing the, the windfall profits of the energy companies.

I’m sitting there reading this going, okay, does that mean you’re going to kick all their profits away when times are good? Are you, are you gonna bail them out then in 2016 when half of them go bankrupt because of no prices? Right, right. You know, it’s, it’s like, it’s just, it’s just politicians, you know, trying to get, trying to get things and, you know, uh, so, but I, I think you’re seeing those kind of things happening and, you know, I think that’s why we’re seeing a.

You know, pretty massive migration to red states that are, that are more business friendly and tax friendly. Yeah. 

Ben Fraser: And I, I, I think too, I mean there was, there was talk about, you know, some of the tax benefits, uh, in real estate kind of going away last year and, you know, but we didn’t see that really happen.

You know, we have seen, you know, bonused depreciation reduced a little bit and that was already kind of planned. But the reality is, you know, some, from a tax standpoint, uh, real estate and oil and gas, they still have great taxes. I have amazing ways to protect and defer taxes, uh, for a long time. And, and, uh, if you can do it, you know, strategically enough, you can actually defer taxes indefinitely.

Um, so definitely do that. And I think one of the thing too, just on a kind of regulatory standpoint that we. Kinda paying attention to, and we’ll see how it kind of plays out as rent controls, right? Because obviously there’s a huge demand and need for housing, especially affordable housing. Um, but we are starting to see some, you know, pushback, potential push and push back on that.

Um, so again, that definitely, you know, favors more red states from an investment standpoint, uh, you know, less, less likely to occur. Um, but definitely. Great, great question. Um, same 

Bob Fraser: question from Don Pat again. What did she ask there? I can’t quite, we already hit her, 

Ben Fraser: so, Hey Don . Good question. 

Bob Fraser: Um, Sandor did we.

Ben Fraser: We just got, uh, sh dos and then yeah, we’ve got, okay. Uh, assessment of senior housing and assisted living facilities. We actually got this a few times in, in the past, so talk about your assessment 

Bob Fraser: there. Well, I mean, we are seeing an aging demographic, so that is, yes, that is pretty positive. But I, I don’t know if we are going to see, uh, the, you know, the, uh, assisted living and these kind of facilities being desirable in the days to come.

We’re seeing office space, you know, we’re not seeing recovery and office space in demand. Mm-hmm. and I believe that people have changed their, their schooling, what they want. They’ve changed their, their work environment and what they want. And I believe they’re changing their re their retirement plans and their, their nursing home plans.

And I think we’re gonna see more home healthcare. I, I’d be very excited to invest in companies that are really delivering home healthcare and home home services, these kind of things. So I’m, I’m not excited about senior living now. I, I could be wrong and we could see demand. Go back, but it feels to me like we’re not gonna, we’re we’re seeing tastes and appetites change Yeah.

For what people are willing and able 

Ben Fraser: to do. Well, I mean, similar to our sentiment on office and hospitality, right? It’s our, our opinions could change on if their opportunities are not, but it’s just too early to say that the, the, the, the, the trends haven’t borne out to see if that is truly gonna present opportunities or not.

So, you know, definitely the demographic trends are, are positive, you know, for that asset class. But some of the changes in. During Covid and, and what we saw with, you know, a lot of these, you know, sickness. So 

Bob Fraser: personally I wanna see everything lined up before I put my dollars to work. I’m not looking for, well it’s got one out of three box outta three check.

I’m like, nah, not get enough. 

Ben Fraser: Yeah. Awesome. Well, thank you all so much for joining on this presentation. This is, uh, really fun to see some of your names pop up here and this will be recorded, so feel free to watch it later. Share it with some friends and, uh, sign up for, uh, the investor club and our mailing list if you are not already.

And appreciate you guys so much. 

Bob Fraser: Have a great 23 guys.

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