2024 Strategy: It’s Time to Buy!
In October of 2022, it occurred to me that a very rare coincidence of two very powerful economic forces may occur in 2024– the beginning of a new business cycle and the Presidential election cycle. (You can read the article here).
It seemed to me that no matter how bad it was at that time–and it was ugly– there was some small chance that this could all reverse in a very positive fashion.
The result would be huge- things get oversold right before a huge liquidity and sentiment shift.
“Very few times in your life can you capitalize on a capitulation in selling, followed directly by massive liquidity and sentiment changes.”
So, while I was getting pummeled in my family portfolios, I started to set up for a once in a decade opportunity to profit.
In fact, on August 1, 2023, I closed on a small acquisition of a five-year-old store where I honestly believe I will 3X to 9X my investment.
2022 Economic Background
You hopefully recall that in 2022 the Federal Reserve Board began an historic and aggressive pattern of increasing short term interest rates. Most economists had shamed the Fed as being “late” in addressing Covid-era money printing and its subsequent rapid inflation.
Consequently, 2022 was a hellacious year for risk assets, especially bonds, stocks, and ecommerce websites. Every asset class declined a lot.
No end to the carnage was in sight. With everything declining off very inflated 2021 prices, there was also lot of profits to give back.
As short term rates rose, cash became king. Money markets offered over 5%. More than $6T sits there today.
Then in October of 2022, global liquidity started to increase and we saw some rebound in equities.
The Set Up in 2024
Obviously, we’ll have an election in 2024. And a recent University of Michigan Consumer Confidence survey reported the both Democrats and Republicans are more confident!
As of this writing both the Federal Reserve and the US Treasury are now supporting the economy.
The US Treasury is run by political appointee Janet Yellen. They are stacking the deck for the President using tactics to keep the markets functioning smoothly by mostly selling short term debt.
First, the Fed kept spreading the doom until a very acceptable inflation stat in late October. This started a huge rally in stocks and bonds.
Then the Fed has indicated in late December they are now actually thinking about lowering rates!
Meanwhile, Republicans are also talking up the benefits of electing their candidates and inspiring optimism.
The real election is only just starting as we go through the primary season.
I predict both teams will say wonderful things in defense of their economic programs, like usual.
But don’t expect the budget deficit to decline from the current ungodly $33T. We heaven’t had an annual budget surplus in two decades. Politicians need to spend to be elected.
How to Make Money
As I have been updating my investment thesis since November 2022, I sort of feel vindicated the opportunity I described is actually happening.
While I made a small acquisition for myself, I am shopping for bigger ones now.
I continue to believe this is a “once in a decade” sort of opportunity.
Here are three concrete steps you can take to get involved in building semi-passive income through purchasing high-ticket dropshipping stores:
1. It’s time to shopping for a bargain TODAY. Prices of websites today are listed around 30X to 33X monthly earnings, down one-third from 45X in late 2021. Ecommerce websites also trade on past earnings. So earnings will continue to be soft in early 2024 while we watch the economy start to recover, a nice way to mitigate your risk.
2. It’s more important you buy a good site than a low multiple. Ideally, you won’t have to do anything and you will experience a 50%+ increase in earnings.
3. Look at a lot of deals. You get comfort and the confidence to act by comparing and contrasting deals. So contact the major website brokers and get on their list of high-ticket dropshipping stores for sale. You can set up notifications for ALL website brokers using Centurica MarketWatch.
High-ticket dropshipping businesses generate steady and predictable cash flows. At today’s multiples you earn over 3% on your investment monthly. Most operational processes can be outsourced.
Please reply with how I can help you:
-Need a primer on the business model?
-Want to “look over my shoulder” as I dissect a deal I see?
-Want to see proprietary deal flow?
Have a great 2024 and I look forward to prospering together.
December 27, 2023
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