If you didn’t buy or own a house before 2021, it hangs over you.
A lot of friends I know who don’t own a home quietly believe they never will (or they’ll need to marry into it).
As you may know, I’m a Bitcoin freak. But when I talk to people about it, the general consensus is that they missed the boat.
Sometimes someone will say “hey, you’re into Bitcoin. What about XRP / some other shitcoin?”
Gold rushes are real, but some are more real than others.
Watching for Macro Movements: Eyes on the Fed
The average person “shouldn’t” have to care about what Jerome Powell does. Too bad that’s not the world we live in.
Everyone complains about inflation, so congratulations, you care.
Most financial booms and bubbles are driven by the Fed. “Oh the COVID housing boom” no man, you mean the trillions printed in two years? Of course that drove the prices of every asset, including housing, Bitcoin, and a bunch of dumb NFTs that are mostly dead now.
In a Fed-driven gold rush, you just have to get in the game.
That does not mean all assets are created equal.
Far from it.
But picking a solid one, even a “safer” one (like the S&P and not my beloved Bitcoin) would benefit you.
Fundamental Shifts
Other big ones to watch is when an industry is permanently changed.
AI is the buzzword these days. So far, AI is not doing anything yet that another developer will do. AI may get blamed for layoffs, but that’s because it’s politically easier to say that then “we’re outsourcing to foreigner labor”. With AI, there’s no one person or group to blame. Not even OpenAI is necessarily the top dog anymore.
However, what AI has done is open up a long-tail of small projects.
Let’s say you have an app idea. It’ll realistically generate you $100k over a few years. However, it’ll cost you 30–50k in hiring developers (probably cheap foreign contractors. lol).
Is spending 50k for a 30k a year a good idea?
On paper, having a 60% annualized return is great. But that return is too small for a corporation to probably devote resources too, and 50k is too large for most individuals to spend on something that might not work.
But now, you can spend three weeks with AI and zero dollars to build the MVP yourself. I made a (free) iPhone app and published it to the App Store just to see if AI really could make something that would get approved by App Store reviewers.
Full disclosure: I definitely edited the app myself, and AI couldn’t do the entire thing purely on its own, but I definitely did not know anything about iOS development when I did it.
AI has become a mini gold rush—not in a huge, say goodbye to software development career kind of way, but for tech-capable, project-manager-minded individuals who want to earn the equivalent of a downpayment.
How to Win a Gold Rush
1. Recognize if it’s big or small
The California Gold Rush unearthed 750,000 pounds of gold in its first 7 years. The cringe saying “they made more money selling shovels!!” is true if you were a loser, yes. If you were smart enough to successfully prospect, you could make out like a bandit.
But maybe you have a weak constitution. Or two young children who can’t go to the mine with you every day. Maybe you’re more suited to selling shovels, then.
It’s right to consider any trends for second- and third-order effects. Maybe you’re neither a digger or shovel seller, but you want to expand your family’s smelting business out west. The bigger the wave, the further out the opportunities expand.
If the Fed starts printing money, dropping rates, or giving out loans, it’s a big one.
2. Make your risk commiserate with your experience.
When the money printers turned on, the people who knew about houses bought houses.
The tech boys bought magic internet money.
Both made money if they were smart about it.
Winding it back, for the tech nerds who had no money, it cost almost nothing to buy a bunch of Bitcoin in 2012. The risk was stupid high, but they had very little to risk.
Now that it’s extremely vetted, and nation-states are putting it on in their treasuries, it’s been significantly de-risked, which is why institutional capital is now flowing in.
With the AI example, all you’re risking to make your little idea is time and a $20/month Cursor subcription.
3. Don’t Wait Forever
If you wait until something is thoroughly de-risked, a lot of the early low-hanging fruit will be picked.
In the beginning of the real gold rush, people were legitimately picking gold nuggets out of riverbeds.
A lot of that is luck, sure, but the quicker you take action, the luckier you tend to get.
There is literally no such-thing as zero risk, in anything, ever.
The risk-free rate is not risk free.
You are not guaranteed any of your “rights”.
You are not guaranteed tomorrow, tonight, or even 5 minutes from now.
There’s no need to be frenetic—and equally, there’s no need to wait once you’ve made up your mind.
1 Comment