Fall has come to Prague. Finally. Summer was rough.
My apartment, on the top floor of what my landlord tells me is an 18th century building, is sans A/C.
By mid-afternoon, the sun beams into my all-glass ceiling and, well, the temperature inside the apartment rises to “just this side of burned” on the toaster setting.
But these days… ah, the joys of a Prague autumn. Cool breezes, temps in the 60s and low-70s. Nights in the 50s.
All of which means it’s apple-picking season here in the city…which, I know, seems an incoherent sentence. Apple picking in the city? It’s not like anyone walks through Midtown Manhattan or Boston Commons and snags a Granny Smith from a tree orchard.
Here it’s different. We have farmland in the middle of the city.
Just south of Prague Castle, on Petrin Hill, an orchard of apple trees lines the hillsides. I head there this time of year to pick fruit, release my inner Martha Stewart, and make my own apple sauce and apple juice.
In all: 36 orchards inside the city of Prague.
Which, roundabout, brings me to Michael Burry…
Burry, as far as I know, does not make his own apple sauce but rather is an infamous investor who angered his clients by betting against the most American of investments—more American even than baseball, Mom, and apple pie—the U.S. housing market.
Burry saw the 2007-2008 housing crisis emerging. He rightly wagered on the collapse of the housing market by way of subprime mortgages. He angered masses of clients who yanked tens of millions out of his fund.
Not too smart, really. Burry was dead-on accurate. He made something like $93 bazillion.
And now…he’s onto farmland and gold.
I’ve been writing about and recommending those two asset classes for more than a decade. They’ve done well…but they’ve got a lot more fuel in the tank for the years ahead.
In our Global Intelligence portfolio, we’re already invested in gold, through our gold miners exchange-traded fund. We’re in agriculture, as well, by way of our Norwegian fertilizer play. And I’m currently investigating a new potential direct play on land.
But first, back to Burry…
He’s all over gold and farmland for all the reasons I’ve been writing about in recent months: Inflation could very well get out of hand, and the dollar is an overpriced, over-indebted asset heading for a comeuppance.
Inflation and a weakening dollar are great for farmland.
Land is a hard asset that rises in value as paper assets (currency, stocks, bonds) decline amid inflation. Doesn’t hurt that farmland produces food, which benefits from higher prices. The world is already experiencing that.
Here in Prague, for instance, my favorite conveyor-belt sushi eatery just recently jacked up prices by nearly 14%. In Malta, where I recently spent 10 days, locals complained that prices for everything from beer to beef are lightening their wallet more than they have in last decade.
And in the U.S., consumer food prices are taking off at a pace not seen in years.
Thing is, consumers prices are a lot like pine sap: sticky.
Companies have struggled for more than a decade to raise prices. Now that they’re able to collect a few extra shekels, they’re not going to casually relinquish that strength.
It’s all part of the commodity super-cycle—a prolonged period of high commodity prices—we’ve been talking about now for nearly six months.
These cycles last several years to more than a decade. We’re only a few months into this one. So, there’s still plenty of growth to come. As that growth occurs—as food prices rise—farmland is going to have a field day (forgive the pun).
By the time we celebrate the arrival of the 2030s, we could very well be reading stories looking back across the Troubled Twenties that point out farmland (along with crypto) was one of the very best investments of the past decade.
More to come on all of this. But for now, I’m just back from Petrin Hill, and I’ve got an apple pie to bake…