Recently, I recorded an episode of a podcast about how people lose and preserve wealth during turmoil, and I found it very relevant to today's life. The following is the Chinese content for reference. Much of it is from https://www.amazon.com/Wealth-War-Wisdom-Barton-Biggs/dp/0470474793. Friends interested can go buy and read it.
My biggest feeling is that everything has "formation, existence, destruction, and emptiness". Where there is cause, there is also end; we should strive, but in the end, we must accept "all phenomena are impermanent". In the tremendous changes of the era, even the entire family of the Russian tsar is insignificant and eventually was exterminated.
Location, location, location
Important things should be said three times. Choosing the right geographical location is very important; otherwise, it can lead to a complete loss of property or even total extermination.
a. There was a Jewish family that divided during World War II; one part fled to France and was completely annihilated, while some relatives escaped to Portugal and ultimately survived.
b. In 1943, many Nazis began secretly remitting money to South America. They did not remit funds to the Eurasian continent or the United States, and this choice was correct at least at that time; of course, they were still held accountable in South America after the war, but that's another story.
c. Most residents of the Soviet Republic in 1991 saw their assets wiped out overnight because most ordinary people had all their wealth in the Soviet system.
If you find yourself in a predicament, observe the details and make your own judgments
Think about who is really winning the game? In 1942, Nomura Securities felt that Japan might eventually lose the war due to food shortages at home; even the park fences around the palace were taken down for iron. Although newspapers and radio stations only broadcast good news about the war, Nomura observed that many Navy officers and pilots who participated in the Battle of Midway and the Coral Sea had geishas and when they didn’t return, their geisha girlfriends became anxious.
The Nomura family sensed trouble and began gradually selling off their holdings, even shorting stocks. But as a Japanese conglomerate, they couldn’t relocate their assets to the victors. So what could they do? They asked themselves what to hold if Japan fell and needed to be rebuilt post-war. They believed that land and real estate would be the best value-preserving tools after the war, and thus bought commercial and residential real estate. These assets provided funding for Nomura Securities to rapidly expand after the war, and Nomura Securities eventually became a leading securities firm in Japan.
The case of Germany
In the 1930s, many German Jewish noble families had great trust in the state, firmly believing "We are also Germans; the storm will soon pass." They possessed assets, status, and social recognition, and had no sense of urgency about leaving their homeland.
However, their judgment was soon shattered by reality. After the Nazis came to power, Germany imposed strict controls on foreign exchange and levied heavy taxes as high as 78% on asset transfers (foreign exchange). By 1938’s “Night of Broken Glass,” more and more people realized they had to leave. But by then, it was too late. Visas were hard to obtain, funds were frozen, and many ended up trapped within the borders.
This part of history reminds us: When you feel "now is not the time to leave," it may actually be when you still have options. ---> Einstein made a great judgment, migrating to Princeton early to teach.
In chaotic times, never go all in
a. In 1937, even Churchill was attracted by the US bull market, leveraged to go long, and by 1938, he was facing a margin call. Later, he repaid his debts through constant writing and publishing.
b. In Germany, wealthy Jews had most of their assets exposed to Germany (real estate, businesses, currency), and ultimately became like frogs in boiling water; the longer they waited to leave, the harder it was to let go of their sunk costs, leading to the loss of both life and wealth.
c. Nowadays, the average lifespan of companies in the S&P 500 has shrunk from 35 years in the 1950s to 10-15 years.
In 1958: The average lifespan of S&P 500 companies was 61 years;
In 1980: It dropped to about 30 years;
Around 2020: It had decreased to about 18 years;
Projected for 2030: It might only be around 12 years.
Be aware of the risks of "self-custody" and "third-party custody"
Think about the restructuring of political systems and wealth in a great upheaval: in plain terms, it means that all previous property rights documents might be invalidated. The money you stored in the bank, the gold you stored, the real estate you bought, essentially, are all under third-party custody. You might think that the property should be in your name, but in fact, it depends on the local government's recognition of your property documents, so essentially, you are also under the custody of a government.
a. During World War II, Polish nobles had their estates confiscated by the Germans, and after the war, they thought they could reclaim them, but Poland was again assigned to the sphere of influence of the Soviet Union under the Yalta Agreement, meaning the nature of the regime changed, completely denying private property rights. Over the past 3-4 years, Russian oligarchs, especially, have had all their assets in NATO countries frozen. When NATO countries sought to impose sanctions, Russian oligarchs found it most difficult to move their 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, and on December 8, the United States declared war on Japan, officially joining World War II; thereafter, the US quickly took measures to freeze Japanese government, corporate, and individual assets in America, with around 120,000 Japanese Americans (two-thirds of whom were US passport holders) sent to wartime internment camps. Many families were forced to sell their properties, farms, and businesses at low prices before leaving, and most could not reclaim these properties after the war.
c. In 1945, after World War II ended, the Tito government in Yugoslavia issued orders to collectively strip all Germans in Yugoslavia (including civilians) of their nationality and property rights. They were regarded as enemy combatants and were not allowed to own land, property, or enjoy normal civil rights. Thousands of German civilians
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