Die Gedanken sind frei, wer kann sie erraten…?
One of the perks of editing a publication like REFIRE is the opportunity it affords your editor to hang out with people who have an uncluttered view of the future. Their relationship with their crystal ball, tea leaves, tarot cards, goats' entrails or other favoured form of divination helps them steer an unerring path through the most turbulent cross winds, knowing what's likely to emerge on the other side.
Here's a recent case in point. During the liveliest panel discussion at the Expo Real trade fair in Munich in October, Professor Lorenz Reibling of Taurus Investment weighed up the merits of Donald Trump as presidential candidate in the forthcoming elections, versus his rival Hillary Clinton.
The charismatic Reibling, a German who has built Taurus into a global real estate powerhouse from its Boston headquarters, with offices around the world, referred to Trump's history as a real estate man, "as against a cowboy running for president, of whom there normally are no shortage compared to real estate guys." Without expressing a preference for either candidate, he did realistically assess Trump's chances of winning – when, it will be remembered, most observers in Europe had already written Trump off.
If he did win, Reibling said, the first thing Trump's going to do is lower corporate taxes aggressively, in the manner of Ireland, to attract and retain American manufacturing on home soil. The stock market will embark on a spectacular rise as companies gear up for a home-grown expansion. With a rise of more than 1,000 points since then, the Dow Jones looks like it's already started.
Also on the panel was Dr. Max Otte, a business school professor in Germany, independent fund manager and publisher of the stock market newsletter Der Privatinvestor. Dr. Otte, who has dual German and American citizenship, has an enviable track record of predicting key financial events. His 2006 book, Der Crash kommt, accurately predicted the financial crisis arising from US sub-prime, while his call to invest in stocks in April 2009 has proved equally prophetic.
He has several times been voted Germany's 'Money Manager of the Year' by readers of the widely-read 'Börse Online' publication. He likes to describe his investment style as adhering to the purity principles of the Reinheitsgebot, like a good German beer, and favours quality stocks, bonds and physical gold.
When he got a teaching job as a professor in Boston in 1998, it was on the strength of his arguments that the euro would prove to be a political and economic disaster. Naturally nobody in Europe wanted to publish his thesis. It may have been unfashionable to propagate such views, but Dr. Otte is an economist drawn to the teachings of the 'Austrian school', and as such your editor took an instant liking to his ideas some years ago.
While he wouldn't do a business deal with Trump, said Dr. Otte, he would have voted for him if he'd got his US voting documents together in time. Trump may be our best hope for world peace, he said, on the strength of his willingness to engage with Putin. Trump and Putin, teaming up to collectively to fight ISIS, is something that Trump had mentioned in most of his stump speeches, and may yet prove to be a critical alliance, Dr. Otte reminded us.
In real estate, the next eruption is not around the immediate corner, and there may be three to four more good years ahead – but at some point these good times are over, and investors will need a new plan. Start preparing, says the guru.
This is where Reibling agreed – we are all being forced, through lack of realistic alternatives, to take investment decisions that we otherwise might not take. The world economy is on life support, and has been since the onset of the financial crisis nearly a decade ago. We can't tell when somebody will pull the plug on the life-support machine - but they will, and soon-ish.
Like Dr. Otte, Reibling believes that when that moment comes, we're still better off in hard assets like real estate than just having cash in the bank. If companies like his can't hold out prospects of lucrative profits to their investors, they can at least argue for the wealth-preservation characteristics of real estate over the near future.
Ah, yes. Cash in the bank. Earlier this year Dr. Otte organised a series of marches – more like lengthy day-long hikes - with the ultimate destination being Angela Merkel's office in Berlin to lay down a mark of official protest. As a free thinker and an opponent of oppressive state intervention, one of Dr. Otte's principled stands is against the abolition of cash in the German economy.
Germany remains a bulwark in the fight against losing our banknotes – as many a surprised visitor to Germany has learned after finding out after a hearty meal that the restaurant doesn't accept plastic cards. In countries like Sweden, cash has become a rarity, with even small amounts being settled by card – or even a swipe of a smartphone.
There is strong resistance in Germany to what is seen as a pernicious trend to make all transactions traceable by the feds, and we strongly support Dr. Otte's initiative in making even a small stand against the inevitable.
Your editor joined Dr. Otte on the penultimate leg of his series of marches to the Kanzleramt – from Werder an der Havel to the Brandenburg capital of Potsdam – a 22km stretch through wooded walkways, along lakeside towpaths and skirting ex-East German military installations. In the great German spirit of hiking, or 'wandern', up hill and down dale to reach our destination, we didn't quite sing "Die Gedanken sind frei", that great German song of protest against oppression and censorship. But we felt inspired and liberated by the sentiment. Hands off our cash!
Die Gedanken sind frei, wer kann sie erraten,
sie fliegen vorbei wie nächtliche Schatten.
Kein Mensch kann sie wissen, kein Jäger erschießen
mit Pulver und Blei: Die Gedanken sind frei!