The Black Sheep.

Quitting my job and living in Latin America for 18 months has left me disillusioned about how the first world thinks.

As you get older, I’ve learned the hard way that it’s important to surround yourself with like-minded people.

The trouble is when you really don’t fit in with the majority and refuse to go down the path of social norms, this can be tough.

I’ve been recently reminded of this and want to go through what I think is a healthy of approaching this.

Most people are unknowingly risk-takers. Their mindset with money is exactly the same as their mindset in making any big life decisions.

For example. People in Australia.

Unlimited credit in the financial system. People in the West are so comfortable with taking out big mortgages. Someone who buys a house these days in Australia is borrowing obscene amounts of money. Australia’s Commonwealth Bank has a higher market cap than Citi Group and Goldman Sachs.

The level of borrowing is well above what people can afford. Australia’s housing market is the most overstretched in the world at 4x GDP.

The golden handcuffs are exactly the best way to explain life in Australia.

Australians are amongst the richest in the world. But on the flip side, they are the most indebted in the world.

The programming is encouraged from a young age, from the schooling system to your family and your workplace. You are considered strange if you don’t adhere to the “Australian way”, the concept of housing only ever goes up, and take out a huge property loan before your 30’s.

It’s quite a convincing program. You have an entire government system, that all have skin in the game at an individual level, structured around protecting its biggest sector.

Source: Independent Australia.

Many people suggest it’s simply too big to fail.

This is why in Australia, we see piss-weak interest rates vs inflation and masses of immigration. While the Australian dollar takes the full force of devaluation and is on track to become known as the Pacific Peso.

Borrowed money needs to be paid back. Yes, you can have people rent out your house to cover the mortgage and engage in the bullshit scheme of negative gearing that seems to attract Australians into the housing market in the first place. Because they don’t understand it completely, usually at first glance people hear the word “tax break” and jump in head first. Typically because it’s what their work colleagues and family are doing, and herd mentality and FOMO (Fear of Missing Out) kicks in.

Source: Independent Australia

I’ve observed through friends and family that once you buy into housing, the chances of selling it all and starting out to embark on another journey are slim to none. Doing this is considered a huge risk, against the grain of what you’re taught, with lots of logistics and bureaucracy, and then, once again, FOMO takes over the mind.

None of it ever made much sense to me. I always wanted to see what the rest of the world looked like outside of the Apple Isle (Tasmania). The thought of having a mortgage I’d need to pay back for 30-50 years when the whole sector was due for a downside explosion didn’t seem like a feeling of liberation and freedom.

The black sheep. As you get older friends start peeling off to the ‘borrow obscene amounts of someone else’s money path’. I understand women and settling down to have a family obviously plays a role in all of this. Most people are left with no choice but to buy into the seemingly neverending housing bull market.

You just have to do it. I get it, renting can be a fucking nightmare.

My issue lies with people who don’t understand the property trade, and then judge others for staying out and doing something different. It reminds me of the time when people didn’t want to pull the trigger on buying uranium stocks until everyone was buying uranium stocks (September 2021 sector highs).

People's view of risk today is extremely skewed.

People consider what I’m doing as “risky”. 18 months without an employer or investment property, still with a regular income while I geoarbitrage my life in low-cost Argentina, trade options for income and let my longer-term investment thesis’ play out.

On paper, I can explain my thoughts quite well. I’ve had enough practice. It’s often a topic of discussion within my family and friend groups back home with little understanding, even when presented with some hard facts I’ve already listed in this post.

I tend to get a “come on mate, you’re just on a holiday vibe. When are you coming back to real life?”

Fair enough. Generational bull markets and societal programming leave their footprint.

People are comfortable with extreme housing market risk. They are “comfortable” because everyone is doing it. Because everyone is doing it, it’s comfortable.

I like this Tweet from Matias and completely agree.

The concept of herd mentality is a beast to overcome. It’s applicable and responsible for many terrible events over history. Nazism, communism, dystopian COVID-19 adherence, wokesim, and climate change policy in my mind, it’s all related.

Having the character and strength to be the black sheep is when your eyes really open up to how the rest of the world works.

I like to think my one year in Argentina has almost left me with a Bachelor of how not to do Economics and a minor in anti-socialism.

I hope you found some value in this post. Maybe the same scenario resonates with some of you. I would love to hear your thoughts.

Cheers,

Jordan - Geólogo Trader 🇦🇺