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The Problem With Real Estate Andrew Snyder, Editorial Director, The Oxford Club
 My son and I have a saying. I imagine it's not all that unfamiliar to you. It goes something like this, "If Momma isn't happy, nobody is happy."
In fact, just about twice a week, my son comes to me like only a jovial four-year-old can and says, "Momma's not happy."
That's when the game starts.
"Is she not happy with you or me?" I ask, knowing the answer determines the fate of one of us for the next few hours.
"It's me," he usually says, knowing he's ruined it for both of us.
Again, if Momma's not happy... nobody's happy.
There's an economic lesson in that idea.
You see, earlier this week, I was riding the train to New York on my way to meet Alex Green to work on an upcoming training event. I spent the first 35 miles of the trip chatting with a young Amish farmer named John.
During our chat, John said something all of us know but are often afraid to admit. "When the farmers aren't happy," he said, "nobody is happy."
It's a critical idea. And yet it scares most of us. It reminds us that we are far from independent. One economic hiccup or a particularly nasty fit by Ma Nature and it'll make our stomachs rumble.
Last week, we explored the idea that freedom and liberty are two very different things. Freedom is something we're born with. But it's wealth that ultimately liberates us from society's shackles. It's an idea that the world's farmers know better than anybody.
Take the recent situation in South Africa, for instance.
"The fate of too many," said the country's president, Jacob Zuma, "is in the hands of too few."
He's referring to South Africa's farms and the folks who own them. Bowing to a populist idea, Zuma wants to ban foreign ownership of farmland. He argues it's too much of a vital resource to place in the hands of outsiders. If Zuma gets his way, South Africa will join a growing list of countries - including Argentina, China, Thailand and even Canada - with limits on alien landownership.
What's more, Zuma also wants to limit the size of the farms owned by South African citizens. He's already working to set up an Office of the Valuer-General that will determine the value of the land the State will "buy" from its people.
The idea of the government taking land from its citizens is not new for the region, either. In the early 2000s, the Zimbabwean government seized countless acres of farmland from its citizens... using guns where necessary.
Again, there is a vital lesson here for all investors to understand. We've already stated it. "If farmers aren't happy, nobody is happy."
The government's desire to control the farmers doesn't stem from optimism or bullish sentiment. No, the leaders are losing control and are doing what they can to regain it... even if it means slashing freedom and destroying the wealth of their citizens.
And don't think it can't happen here. It happens every day.
In fact, the farmer who owns the property adjacent to mine lost nearly half a million dollars when the local government told him he couldn't build a house on his land. It's his land... but their rules.
Or what about the farmer forced to sell to make way for a road leading to the new mall? Forget to pay your property taxes for a year or two and see who really owns the land.
Again, we're free to buy what we want. But until we're able to secure our wealth - free from the control of others - we're not truly liberated.
The Oxford Club believes in deeply diversifying your wealth. We tell our Members to diversify across asset classes, investment strategies and timelines. And real estate (foreign and domestic) absolutely has a place in the plan. But you should never have the majority of your wealth in real estate... there are simply too many variables out of your control.
For investors who want to take advantage of rising real estate prices, don't look only at real land. Look at diversifying into real estate investment trusts (REITs). It's land that essentially trades like a stock and offers the same sort of asset appreciation without the hassle of taking possession of land. REITs add another layer of liberty to your portfolio.
My Amish friend was right. Farmers are the economy's best barometer. Here at home, they're fine for now. But in the nations with the biggest economic problems, it's the farmers who find out first.
When they're not happy, nobody's happy.
Good investing,
Andrew Snyder
Editorial Director, The Oxford Club
P.S. President Zuma's quote about the fate of many being in the hands of too few doesn't just relate to South Africa... According to new research, global food production must increase 40% by 2050 to keep up with our fast-growing population. The good news is, a handful of companies have the means and the technology to make it happen. The Oxford Club's Resource Strategist Sean Brodrick has compiled all of the need-to-know details (including how you can make 878% or more on this situation) in his latest report. Get it here.
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