Author: Bill Qian Source: X, @billqian_uae
My biggest feeling is that everything has "birth, existence, destruction and emptiness". If there is a cause, there will be a cause and an end. We should try our best in everything, but in the end we must also accept "impermanence". In the great changes of the times, even the entire family of the Russian Tsar was insignificant and was eventually wiped out.
1. Location, location, location. Important things should be said three times. It is very important to choose the right geographical location, otherwise, at the least, the property will be reduced to zero, and at the worst, the whole family will be wiped out.
a. There was a Jewish family that split into two groups during World War II. One group fled to France, but was wiped out and all were sent to concentration camps, while some relatives fled to Portugal and survived.
b. In 1943, many Nazis had already begun to secretly remit money to South America. They did not remit money to Eurasia or the United States. This choice was at least correct at the time. Of course, they were still liquidated in South America after the war, but that is another story.
c. In 1991, most residents of the Soviet Republic had zero property overnight, because most ordinary people were all in the Soviet Union.
2. If you are in trouble, you should see the big picture from the small details and make your own judgment: Think about who is winning the game? In 1942, Nomura Securities had already sensed that Japan might eventually lose the war from the food shortage in Japan and the removal of the park fence around the imperial palace for iron smelting. Although newspapers and radio stations only broadcast positive news about the war, Nomura observed that many naval officers and pilots who participated in the Battle of Midway and the Coral Sea had geishas, and when they failed to return, their geisha girlfriends began to panic. The Nomura family sensed that things were not going well and began to gradually sell their stocks, even shorting them. But as a Japanese consortium, they had no way to allocate assets to the victorious countries, so what should they do? They asked themselves, if Japan lost the war and rebuilt after the war, what should they hold now? They believed that land and real estate would be the best value preservation tools after the war, so they bought commercial and residential real estate. These assets provided funds for Nomura Securities' rapid expansion after the war, and Nomura Securities eventually became a major securities company in Japan. The case of Germany: In the 1930s, many German Jewish aristocratic families were full of trust in the country and believed that "we are also Germans, and the storm will soon pass." They had assets, status, and social recognition, and had no sense of urgency to leave their homeland. However, soon, their judgment was shattered by reality. After the Nazis came to power, Germany implemented strict control over foreign exchange and imposed heavy taxes of up to 78% on asset transfers (foreign exchange). By the "Kristallnacht" in 1938, more and more people realized that they had to leave. But at that time, they couldn't leave even if they wanted to. Visas were difficult to obtain, funds were frozen, and many people were eventually trapped within the country. This history reminds us: when you think "you don't have to leave now", maybe it's time for you to have a choice. ——Einstein made a good judgment and went to Princeton to immigrate and teach very early.
3. In troubled times, don't all in
a. In 1937, even Churchill was attracted by the bull market in the United States and took leverage to go long. As a result, he was liquidated in 1938. Later, he paid off his debts by constantly writing and publishing.
b. The wealthy Jews in Germany, because most of their assets are German exposure (real estate, enterprises, currency), finally boiled frogs in warm water, the later they leave, the more reluctant they are to give up the sunk costs, and finally they lose both their people and their money.
c. It is even more so in modern times. The average lifespan of the constituent companies of the S&P 500 index has been reduced from 35 years in the 1950s to 10-15 years. In 1958: the average lifespan of S&P 500 companies on the list was 61 years; in 1980: it dropped to about 30 years; around 2020: it has dropped to about 18 years; it is predicted that by 2030: it may only be about 12 years.
4. Be aware of the risks of "self-custody" and "three-party custody": think about the reconstruction of the political system and wealth in the great changes. To put it bluntly, it is possible that all previous property rights documents will be invalidated. The money you deposit in the bank, the gold you deposit, and the real estate you buy are essentially three-party trusts. You may think that the real estate should not be in my name? But in fact, the real estate depends on the local government's recognition of your property rights documents, so in essence, you are also entrusted to a government.
a. During World War II, the estates of Polish nobles in their own country were finally confiscated by Germany. After the war, they thought they could take them back, but Poland was assigned to the Soviet sphere of influence in the Yalta Agreement, which means that the nature of the regime has changed and private property rights are not recognized at all. In the past 3/4 years, all assets of Russian rich people, especially oligarchs, in NATO countries have been frozen. When NATO countries want to impose sanctions, the most difficult thing for Russian oligarchs to take away in London and New York is real estate.
b. During World War II, Japanese assets in the United States were also frozen or even confiscated. On December 7, 1941, Japan attacked Pearl Harbor. On December 8, the United States declared war on Japan and officially joined World War II. After that, the United States quickly took measures to freeze the assets of the Japanese government, companies and individuals in the United States. Among them, 120,000 Japanese (2/3 of them were citizens with US passports) were sent to wartime isolation camps. Many families were forced to sell their properties, farms, and businesses at low prices or lose them directly before leaving. After the war, most people could not recover these properties. c. At the end of World War II in 1945, the Tito government of Yugoslavia issued an order to collectively deprive all Germans in Yugoslavia (including civilians) of their nationality and property rights. They were regarded as a group of war criminals and were no longer allowed to own land, property, or enjoy normal civil rights. Thousands of German civilians (including children and the elderly) were thrown into labor camps, and it is estimated that 50,000-60,000 people died in these camps. Especially from the end of 1944 to 1946, some areas were systematically cleansed: German men were forced to work or shot on the spot; German women and children were raped, abused and massacred.
5. About the custody of gold (self custody? Or 3rd party custody?):
a. The gold entrusted by Jews in the safe deposit boxes of French banks was opened by the German army after the German army occupied it, and all of them were confiscated. However, the gold buried in secret places known only to themselves was preserved after the war.
b. I also heard a very interesting story that a Jewish family reserved 10% of their family wealth in gold, and because of the experience of "three-party custody" being confiscated during World War II, they kept their own gold and exchanged most of the gold for gold coins instead of gold bars. Because only gold coins, which can be used for small payments, can allow you to buy your way through the war zone and pass through the many checkpoints to the area you want to take refuge in the chaotic world. In 1939, 20% of the wealth of most French families was gold bars, which were either stored in Switzerland or buried in the backyard of the castle. In those terrible years, there were three problems with using gold to hedge against disaster: First, in order to sell some gold, you had to find a real buyer or a black market dealer. In that brutal society full of informers and betrayers, anything could happen. You might end up stabbed to death in an alley or locked up in a cellar by the Gestapo. Second, whether it was a real buyer or a black market dealer, the price of gold would be greatly discounted, but since there was no open trading market, this situation was inevitable. Third, if you stayed in occupied France, you had to hide the gold. From the fall of 1940, all French banks had to report the contents of their safes to the Germans. The occupation authorities issued promissory notes to "borrow" the gold and then shipped it to Germany. After the war, these promissory notes were not redeemed because the Nazi government destroyed the relevant archives during the Battle of Berlin. As the Allies approached Paris, all the remaining gold was confiscated by German officials to help them escape the impending disaster. However, in the chaos of the last few years of the war, gold buried in the backyard was more valuable and safer than any other asset class, such as real estate or businesses. In general, the history of World War II tells us not to lock gold and jewelry in the bank safe of your country.
6.Summary: Troubled times are the norm, and prosperous times are the exception. In the past 3,500 years of recorded history of mankind, there are less than 300 years in which there were no recorded wars in the world. Our advice to everyone is: First, don’t go all in: diversify asset classes, geography, and third-party custody/self-custody; second, a gentleman does not stand under a dangerous wall, be prepared for trouble before it happens, and don’t have an ostrich mentality. When everyone wants to leave, you can’t leave.
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