Excess Capital Creates Opportunities

Eadweard York and I ride in Ferrari along Highway 101 in Laguna Beach, California.

By Michael Hooper

We live in a country where there is excess Capital looking for opportunities. Excess capital is going into the digital currency markets, special purpose acquisition companies, along with real estate and the general stock market, everything's inflated, and inflation is happening.

I see this as a genius opportunity to get in front of a sea of cash and collect high margins of profit, especially in the areas of safe travel services, real estate, construction, finance, banking, and transportation services such as railroads. There are opportunities to create a transportation company delivering fast food, groceries and pharmaceuticals.

I also see opportunities for off-the-grid services like tiny houses and van living. Owners of these companies are probably doing well. Stocks in transportation companies have soared.

There's excess capital in the market and not enough workers to serve it, creating job opportunities. Today's working people can expect to be paid more for their efforts.

The independent person who loves solitude is thriving right now because covid-19 protocol fits his lifestyle of working remotely from home. Fortunes are being made as young upstarts are watching their Acorns accounts rise. No wonder their heads are deep inside their phones as they buy more stock in their favorite car company. They're watching their numbers go up as the stock market hits all time highs. And good for those Reddit traders who shoved it in the face of the short sellers on Wall Street as they drove up the price of GameStop from $10 to over $300.

Man if you can't make money in this market, something's wrong. Heck the government is giving it away. I got several stimulus checks. We put the money into the house.

This real estate bull market has room to go. Everywhere around the country there is not enough supply. Inventory of houses in Shawnee County, Kansas, is around 165 residential homes on the MLS. Topeka and Shawnee County used to have 900 to 1,000 homes for sale on the MLS. But after the financial crisis of 2008-2009, Spec building died. No one wanted to build a new house on speculation. Either they had a buyer up front or they didn't build and that's why the inventory is so low.

I've watched several houses sell recently in my neighborhood. They sold in two days. And people are offering $10,000 over asking price. One seller had the pick of four offers after a weekend of shows at the house.

Total home sales in the northeast Kansas Sunflower multiple listing service rose by 12.2% last month to 377 units, compared to 336 units in May 2020. Total sales volume was $70.0 million, up 27.2% from a year earlier, according to Sunflower's web site.

The median sale price in May was $161,000, up from $142,750 a year earlier. Homes that sold in May were typically on the market for 3 days and sold for 100.0% of their list prices. Sunflower MLS includes Brown County, Greenwood County, Jackson County, Jefferson County, Lyon County, Nemaha County, Osage County, Shawnee County.

The downside to all this demand in the housing market is people being priced out of certain communities, where housing is entirely too expensive compared with the local wages.

Shawnee County, Kansas, lost 1% of its population in the most recent census. Many people moved away. Several employers, like Payless ShoeSource and the Menninger Clinic, left Topeka. But we have some strong employers here remaining and some new ones in the last 20 years including Advisors Excel and Se2. The pet food industry remains strong in Topeka area. The new Walmart distribution center in south Topeka is gigantic, I've never seen a building so big.  Walmart has five store locations in Topeka. With the new distribution center, Walmart is among the largest employers in Shawnee County.

I recently had some concrete work done on my house by a local contractor. I had called the contractor last September but had to wait six months before they arrived. They did a great job rebuilding my driveway and step to my house. If you call that same contractor today, they will not be able to serve you until 2022 because they have such a long waiting list of business demand.

Another area that we're seeing inflation is the agricultural markets. Kansas farmers are the beneficiary of higher commodity prices especially corn and bean prices, with corn  $6.50 per bushel and beans at $15 per bushel. Farmers are growing crops that may bring the highest returns they've seen in a long time. And crops are looking good. There's been plenty of rain and sunshine this spring.

Land prices hit all-time highs in 2012 and 2013 and then sort of fell back maybe 10% and climbed back up again and really haven't declined much at all.

Farm machinery is very expensive, now over $500,000 for a new combine. I remember when combines broke the $200,000 mark in the 1990s, I thought that was crazy then.

Yet there is inflated levels of capital floating in the markets. The Federal Reserve pumped trillions of dollars into the market. Banks are flush with cash. So are many Americans who have pent up demand to spend money on travel to special destinations. People will pay big money to sit in a hot tub in Paradise right now. They probably will tip you pretty well because customers are just hungry for adventure and personal service.

The lucky ones are working in good jobs and stashing cash for investments and making their dreams come true.

America is the land of opportunity. Now is the time to make the money when there is excess capital in the markets.