What will you do to get wealthyduring the next financial crisis?

JohnSmith, I am a 30 year old self made pentamillionaire.

I’m already getting prepared. Onething is for certain, it will happen again. Financial markets are way toofragile as they stand right now.

During the financial crisis of2008, I made good money buying put options. I will do the same thing againduring the next financial crisis. What’s remarkable is that it was blaringlyobvious the markets would continue to tank in 2008, and yet the options marketdidn’t adequately price this in. This left huge opportunities for small timeinvestors like myself. I anticipate that the same conditions will apply duringthe next financial crisis. A lot of small time investors will get very richbuying puts during the decline. Many may never have to work for money again.

During the last meltdown, I tookout as much debt as possible.

I now have $1.6 million in realestate debt, but I have about $4 million in equity. I’m currently in theprocess of getting a line of credit from a small bank for the amount of $3million. The loan has a draw period of 10 years, which should be plenty of timeto put the line to use during the next recession.

When the market starts to tank,I’ll withdraw my $3 million credit line and deposit into my brokerage accounts.I’ll use about $1 million of the funds for put options. The rest I’ll use tobuy marginable securities like SPY or VTI.

I’ll open a “pledged asset line”of credit. I’ll put up my marginable securities as collateral for another loan.This is not a margin loan. My current “PAL” has an interest rate of 3.75%.

I’ll withdraw my “PAL” of creditand use that on more down payments on real estate. 75% will be financed and 25%will be equity.

After the purchase of my options,I’ll have about $2 million worth of stocks I can borrow against. I’ll withdraw$1.4 million and use that as down payments toward the purchase of about $5.6million in real estate.

If real estate prices doubleagain, like they did during the previous financial crisis, I’ll turn my $1.4million investment into $7 million. If stocks tank like they did last time, Ishould be able to make 1,000% on my options, or $10 million. The stock valuesshould double from $2 million to $4 million over the following 5 years.

If I’m not confident about makingsuch bold bets, perhaps I’ll just use the same strategy but deploy 50%, or 25%of the capital. Or maybe I’ll just pay cash for the real estate purchasesinstead of getting mortgages. The beauty of this, is that I’ll have options todo whatever makes sense based on my risk tolerance and market conditions.

Ultimately, a lot of money shouldbe made. The average investor with considerable savings and a decent amount ofknowledge about real estate and options should also be able to retire by thetime it’s all over.

YES, this strategy involves substantial risk. You can easilyblow out your account, lose all your real estate, and end up with $0, or evenend up having a negative net worth by the time it’s all over. This is mypersonal plan, but it shouldn’t necessarily be yours.

金融危机时，你会做点什么来使得你富有 03:58 Share

Quora Selected 附导读

Shownotes Transcript

金融危机时，你会做点什么来使得你富有