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Back Country Buying Binge

05/12/11 by  
Filed under Bourbon & Bayonets

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There’s a structural change now taking place across the western world that will likely shape our future as much as any other phenomenon or development we’ve encountered in our lifetimes.  It goes without saying that it will also affect the future of our investments.  It’s a development that very few are currently speaking about.

The depopulation of major urban centers has already begun. We’re not talking here about the flight from inner city crime, the challenges of educating children in such an environment or the social instability that’s part and parcel of modern urban America.  These phenomena are well documented and have existed for well over half a century.  The flight to the suburbs is actually a relatively old story that’s left a gap which has been filled largely by newer immigrant communities – a role they’ve fulfilled astoundingly well.  But that’s not likely to continue forever.

What we are referring to a genuine depopulation that results from cities becoming unliveable in the truest sense of the word.  It’s a negative feedback loop that begins in economic contraction, leads to fewer work opportunities and growing crime, is magnified by a swiftly dwindling government safety support net, that then further reduces retail spending, destroys more jobs and ultimately sends people little by little out of the urban arena altogether, to the countryside in search of:

  • work opportunities,
  • more affordable living spaces,
  • plots to grow one’s own,
  • cover from the dangers of a decaying urban social atmosphere, and/or
  • old fashioned charity (something the folklore indicates is more readily available in the country).

The jobs lost in the last several years are not coming back.  We are as a country simply no longer competitive with the rest of the world.  Blame unions if you want; it doesn’t matter.  The same products are now available to us cheaper because they’re produced overseas.  There’s no reason for this trend to stop.

More than this, the economy at large is a train wreck in waiting.  There will be no soft landing from the mess that will, at some point, hit us full frontal lobe, and send literally millions into the streets looking for gainful employment.

The intelligent are already starting to venture beyond the ‘burbs and are planning for more difficult times.  The latecomers will be less prepared.  Everyone will be in search of the basics: medicine, seeds, fertilizer and canned goods.  Those who are interested in profiting from the specter of this wholesale migration to the wilds will focus on the four G’s: Gold, Guns, Gas and Grub, those items that are certain to be bid higher under such circumstances.

In the time leading up to that upheaval everything will appear to function as normal.  The early birds (those ‘nutcases’ who see the writing on the wall and start making their way toward the rural but-nutter lifestyle) will get the pick of the land and will therefore be best situated to survive the mess.  But outside of the silly speeches these ‘wackos’ sometimes make, all will be business as usual.

Markets will rise on a wave of printed currencies the likes of which has never been seen.  The banking system will heave and groan, this way and that, but is unlikely to buckle until the very last moment – and that event could still be a decade away.  Wars will come and wars will go, politicians will deceive and athletes and actors, indeed celebrities of every stripe, will continue to be admired for everything but their characters.

And investors will be duped into believing that business as we’ve known it in America will continue just as it has long, long into the future.

Would that it were so.

Alas, we at Oakshire Financial are in the business of not only correctly forecasting trends and events, but of profiting from the same in the markets.  And so in the next few weeks we are suggesting you take a closer look at a few investments that fit with the scenario we’ve discussed above.

The depopulation phenomenon has already started and could kick into high gear should the real estate market take another leg down.  At that point, Amerco (NASDAQ:UHAL), the stock holding company of U-Haul International Inc., should begin trucking in all four gears.  U-Haul is one of America’s premier do-it-yourself moving and storage companies.

Technically, the pennant forming (in blue) is a bullish continuation pattern.  And with all its moving averages rising, there’s much in Amerco to be bullish about.  The only worry we have is that the price action is now 60% above both the long term moving average and rising trendline.

 

Many happy returns,
Matt McAbby

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Comments

27 Comments on "Back Country Buying Binge"

  1. ed cowen on Thu, 12th May 2011 6:23 PM 

    crap

  2. Vincent Cassano on Thu, 12th May 2011 6:29 PM 

    If people want to move themselves, then UHaul is one way to go. We have relatives in NYC and they wouldn’t move for anything. They love it there. That being said, those leaving NYC are literally moving to another city, Brooklyn, NY. UHaul could be one solution, but what does it matter if in ten years it’s all over?

    I recall in the 70′s and 80′s there was a fellow by the name of Howard Ruff. He kept predicting the end of the world. We’re all still here though. What we tend to forget is that life does go on. Americans adjust, and unless it’s literally the end of life, we will adjust once again.

  3. gunder schoepe on Thu, 12th May 2011 6:30 PM 

    Alas, you are making a very plausible and logical case … looks pretty much things are moving in that direction. Time to act early!

  4. Edward Parise on Thu, 12th May 2011 6:33 PM 

    Interesting extrapolation however maybe the massive move to the rural areas won’t happen if people don’t have the money for what might be astronomical fuel prices, potentially. Then again, if patriotic Americans, and that does NOT include the statists now in process of strangling America, take the country back and put it back on top like it always has been, there might not be the need for all U-Haul’s trucks to be heading down the highway. Where does the stock price then go?

  5. EDGARD MORALES SR. on Thu, 12th May 2011 6:43 PM 

    YOUR COMMENTS MAKE SENSE, YOU ONLY HAVE TO LOOK AT THE CITY OF DETROIT AND THE STATE OF MICHIGAN. PEOPLE ARE LEAVING THE CITY AND THE STATE IN DROVES. THAT HAS BEEN HAPPENING SINCE THE MID 70′S, PICK UP DURING THE 80′S AND THE LAST TWO DECADES OTHERS STATE IN THE NORTHEAST CORRIDOR HAVE BEING FEELING THE STRESS OF OF LEAVING TAX PAYERS WITH THEIR FAMILY.

    BUT THIS IS PART OF THE CYCLE OF LIFE, NOTHING LAST FOREVER !!!

    EMG

  6. jack on Thu, 12th May 2011 6:58 PM 

    Looks good, but, the market is still due some correction. Buy on dips.

  7. Stephen on Thu, 12th May 2011 6:59 PM 

    Couldn’t hit the nail on the head any harder. My family had to move (just moved 8 month ago) from what was once a peaceful little town in New Jersey, that might of been “Beford Oaks, America”, in that old Christmas Film.
    Why–? “Immigration”, my friend, turned into “little Egypt” over a 5 year period, i.e., it was ruined, nice little stores gone, crime way up in only four years, drugs, trash, and 10,000 dollar a year taxes?
    That town was Bayonne, N.J.

  8. cody on Thu, 12th May 2011 7:11 PM 

    Today I woke up in Los Angeles and caught my flight after a day at work to Seattle. I sat in just shy of four hours of traffic today and read this arrticle somewhat wishing this movement was already in place. I feel as though big cities are as full as they have ever been. Insightful article, but would appreciate some statistics related to acceleration in people moving from urban to more rural areas. Something besides simply anecdotal speculation. Nonetheless, good article and definitely gave me some things to think about.

  9. ED ARIOLI on Thu, 12th May 2011 7:34 PM 

    QUITE UN BELIEVABLE BUT PROBABLY TRUE
    SO NOW WHAT TO DO .

  10. David on Thu, 12th May 2011 7:57 PM 

    Not sure but certainly possible. Why would the price of gas make the country life more affordable?

  11. dave on Thu, 12th May 2011 8:10 PM 

    End of the world and the best you can come up with is U-Haul? Lame

  12. Dave Kress on Thu, 12th May 2011 9:42 PM 

    I love the reality, brutal overview, and the four G’s.
    Several people I know are already preparing. One going to Uruguay, the other too Canada.

    I would add to your UHAUL recommendation, Public Storage
    International, a leading storage facility with a strong and
    steady history. As more foreclosures occur, storage may
    become a necessary premium market for those who hope to relocate somewhere else when they call Uhaul to haul them
    out of their Public Storage facility.

  13. Cyril Camblin on Thu, 12th May 2011 10:12 PM 

    “Cancel my subcription to the resurrection”
    The sky is falling! The “Y2K BUG” is back.
    You guys are really “UNAMERICAN”!! What a crock!! Where is your sense of dignity peddeling this vile negative view of the future of YOUR country!!!! Maybe your leader has just got a bullet in the brain!! You are a repulsive cyst on the face of the grim reaper. Perhaps you are searching for John Connor??!!
    Your putrid prognastication parallizes my big toe!~!

    If this ever happened most of U-Hauls trucks with the wobbly wheels and bent frames would wind up being ditched by all the “MAD MAX” maniacs in you bent futurama.

    Thats okay go for a drive in your “EUROPEAN DESIGNED” luxury
    automobile. As for me… I will wait for the real Americans to deal wih your motley crew.

    Got it …now BUGGER OFF!!!!!

  14. Dewayne Fisher on Thu, 12th May 2011 10:17 PM 

    I believe you are partially right for the young people that is where opportunity lies further out. But I also believe the baby boomers are selling single family detached at a alarming rate therefore forcing down the housing prices and increasing the condo prices in urban areas near hospitals. The old can’t afford to move out of the cities because they desperately need health care and reliable city transportation and the necessities close to them. So yes young family oriented people will move out to the suburbs for lower cost housing and have the option of growing their own food crops and cheaper cost of living.

  15. Harold C McIntyre on Thu, 12th May 2011 11:19 PM 

    U-haul will go down with everything else when uncle ben gets done. Things get bad enough they’ll just steal those U-hauls to live in. I’ll stick with physical precious metals as the back bone of my investments, guns and ammo to protect what’s mine, and maybe make a little whiskey to trade. In the mean time I’ll buy gold and silver, PM stocks, and select ETF’s on price drops and trade at tops to buy more latter.

  16. Edward Drean on Fri, 13th May 2011 12:03 AM 

    didn’t we go through this same 4g scenario – in spades – during the ’80s. i could not lift my safety deposit box it had become so packed with silver. i bought a Winchester 30-30 and a 12 gauge pump. but au, slv and interest rates tanked, and I have yet to squeeze my two trusty triggers. Life went on, I got a better job, and I love the people i meet. investing in gloom is for tulip-bugs.

  17. SAILOR JO on Fri, 13th May 2011 1:00 AM 

    Populist article. The scenarios my come true in some parts of the country. In SoFlo, however, there are to many seniors. They cannot move, they cannot farm, and often enough have good reserves and/or children to support them. No gun. Crime happens anyway caused by lazy guys who rather steal than work. As law enforcement does not really happen and education fails this problem will only grow.

    On the other hand, the US could become competitive again if they would just listen (to me and others) and make society roll over. Corruption, inefficiencies (big time), fraud, and ideologies prevent improvement. Still, one day others may catch up with US labor cost and may help the US indirectly.

    Two examples of US inefficiency: Miami Dade county has 31 cities and 31 police forces and 31 fire fighter organisations. The unincorporated areas have sheriffs and on top there are state troopers and school police and so on. This is an unbelievable waste! Because there are so many miserable drivers on the road some people believe there should be more roads. In Boca Raton, FL, is a major East-West road (one of seveal) with six lanes. Now they want to widen that road to 8 lanes. That is insanity! People have a hard time crossing 3 lanes, guess what happens on 4 lanes! I am a professional driver and have observed traffic on that road for many, many hours. Most of the time a single lane each direction can carry all the traffic though that would take some driving discipline. In rush hour 2 lanes would do. Florida legislators should have the guts to outlaw cell phone use during driving and fine violators with amounts that pay for the law enforcement plus some. If you need to work while on the move you should use public transportation.

    Sometimes I think FL is reigned by senile guys who have nothing on their mind but spending OPM.

  18. Matt Kingsly on Fri, 13th May 2011 9:08 AM 

    Oakshire is the only one talking about this, and for the most part they are right on. As I don’t see the total Armageddeon scenario (farming!) it will get extremely painful because it has to. There is not enough money to keep Fed spending alive and because the debt is SO big, Fed spending can’t continue so when the taps go off, the pain will ripple fiercely throughout the economy for many years. There is nothing I sell on my blog, read at http://www.pulpamericana.com Matt

  19. Lisa on Fri, 13th May 2011 9:46 AM 

    I agree and disagree. I disagree with people leaving the city and moving to the suburbs, some will but I see people leaving to go more towards the city. I do agree with most of the rest of the story.

  20. Bo Saunders on Fri, 13th May 2011 10:23 AM 

    You may or may not be right, but you are suggesting a short term trade based on a way in the future occurrence. What long term investment would you make to take advantage of your prediction?

  21. Jim on Fri, 13th May 2011 10:31 AM 

    My experience is that predictions of more than a few months to a year are usually worthless. Some of the trends you refer to are already well underway (see Drudge today re: people age <30 leaving New York State), so they are not actually forward looking. Forecasting a pessimistic scenario ALWAYS sounds prudent and conservative, even erudite, although it may be dead wrong.

    When I was in 4th grade (1973) my dad read a lot of the leading forecasters of the day–one I remember in particular, Howard Ruff (a gold bug) sounded alarms that sound very similar to yours, so it would seem there is some cyclicality to this phenomenon.

    I also remember the gas crisis (also 1973)–we were all CERTAIN that by the year 2000, we'd all be riding around in electric hover cars like the Jetsons. DID ANYONE predict the popularity of HUMVEE's that got 10mpg?????

    Matt, although I thoroughly enjoy reading your commentaries, you real talent lies in predicting trends on a much shorter timeframe. Keep up the good work.

    Best regards, JIM

  22. Diane Collins on Fri, 13th May 2011 10:57 AM 

    I have no doubt the administration will ruin this country. People may only be able to survive in Rural areas. I do think we all need guns and food but I don’t know how to store gasoline. Will there be gas and electric still into our homes. Money will be of no value. We do need gold and silver. However I do think the hungry in the urban areas will come out to loot, steal and hurt those that are prepared. So either way you can’t win.
    I said with all the houses being forclosed on that the government and banks would get to gether to find away to make money on this down turn. They have, they announced Fannine and Freddie and the banks will being buying up lots of houses from certain areas. Then resell them for lower prices then write them off the bank’s books. They should have never bailed out anyone and just let the pieces fall where they may! Now we our displacing people out of their homes that still have no money so how are they going to rent a house or an apartment. You know jobs are hard to find and with that idiot in the White House we will never get this economy to grow for a very long time if ever again. I think the banks should just give the indiviual home owner the home and let them pay what they can or we are going to have a problem of unequal proportions! The banks, the government, the companies should not take these homes for resale. But it’s greed and soon their greed will mean nothing when our dollar falls and be worth nothing.
    Yes Obama has given us change the change Americans really don’t want except maybe the academics in the East. Let those people go over and fight the wars. Now that we have Ben Laden dead the stay in Afganistan has just turned into a political war just like Viet Nam. We are suppose to learn from history but we never do. Most of our kids don’t even know their own history of how America became a great country. Obama will turn this into a Nanny state and they never work. They always turn into communistic ways after going through the Socialism society.
    I am ashamed of this country and I’m ashamed of what American don’t know. They are being led like Lemmings by the great one.

    We need a new start with another George Washington. The East and the people in California run our country. Everyone tied up in the bank debacle were graduates of Harvard or Yale. The Liberal professors are the real problem. Go sit in a class room of elementary children and just here what they are being taught. They have been brained washed into enviromentalist. When years ago we reused our bottles over and over again. We had no paper towels or disposible diapers. Clothes were dryed by the real energy source, THE SUN!
    We are in deep trouble and this government is just stupid. They won’t admit it but they have no idea what they are doing!

  23. Dave Harkcom on Fri, 13th May 2011 11:58 AM 

    Whether you’re a “doomer” or not, SWHC and RGR often have a nice bounce on the heels of very bad news.

    DZZ volume has been falling off in recent days, particularly as Plosser, Lacker, Fisher, Kocherlakota and Hoenig note inflation as a looming threat that will have to be dealt with seriously at some point. If there are any double- or triple-short oil or silver ETFs or ETNs, fluctuations in their volumes would also be telling.

  24. David Graham on Fri, 13th May 2011 1:59 PM 

    I do not know about the validity of your Uhaul recommendation, but your sense of a global financial meltdown is spot on. I was impressed that you do do not try to forecast when it will happen. No one can do that – but the structural problems we face in this economy will result in a very hard landing with serious social consequences. Could be next year, could be in 10 years, but it is coming.

  25. Stephen on Fri, 13th May 2011 9:27 PM 

    I dont want to change the subject, but I’ve changed by stance in the “end of the USA”, to the fact that the country will recover, and we’ll all be fine. Our currency will continue to be the default currency in the world. Ultimately, the US was survive, after some troubled years, and some major restructuring in government.

  26. BillS on Sun, 15th May 2011 5:24 PM 

    The flow of people to and from urban centers is a natural process. Most large cities are located on major waterways. They have strategic importance and value. Industries come and go and people adjust as needed. The land value and ability to reformat the layouts and use provide incentives for long term investors. Things change and someone always wins (or losses) in the process.

  27. H. Craig Bradley on Fri, 17th Feb 2012 5:54 PM 

    BOILING FROGGIES

    First, survival skills are not part of everyday training or experience. Even if they were, wild game populations in states like Colorado are simply not adequate to feed even the smallest local resident population. Besides, regular rifle big game hunting season is pretty short, just a month or so in the Fall. All species are taken only by lottery and must be applied for months in advance.

    If where you live is not too high in elevation and has fertile soil, then it may be possible to grow some common vegetables in a small garden. This will help if you want to go back to the 1930′s and learn how to can your own vegetables. If not, you have to buy them at the grocery store and rotate your stock. Canned goods seldom keep more than one year. Ditto with frozen meat.

    Legacy productive ranches and farms in operation are hard to find for sale and often cost millions of dollars to buy, as well. So, most people will not be buying real farms or ranches, in the United States at least. For that, you may have to immigrate to places like Chile where farm land is still affordable.

    Therefore, most suburban Americans will be stuck where they are, more or less, and will suffer the fate of the country’s decline as it is, like rats in a barrel. In addition, many may die in the coming upheavels, like boiling froggies.


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