Ragnorck or Recession? How a Viking Times the Market

2008: America’s Ragnarok

On January 2006 Autozone stock was worth roughly $95 dollar per share. Less than 10 years later the stock was hovering right around $800 per share. That is an incredible 700% increase in value. Meanwhile, General Motors, one of America’s largest car manufactures, stock price had dropped below $1. GM was forced to declare bankruptcy.

The main reason for General Motor’s bankruptcy was the devastating famine known as the Great Recession, where household’s average lost 1/3 of it’s of their economic buying power. As a result, more and more Americans turned on fixing their cars, rather than buy new ones. According to Cars.com the average age of a car on the road was 11 years. This lead to an explosion of value for Autozone, as more and more Americans turned to the auto parts supplier to help get them through the recession.

The Viking Cycle of Life and Death

recession

This situation is a perfect example of the “Viking Cycle.” It is fraught with warfare, death, Ragnarok, and new life, only for the cycle to begin again. But it is important to note that the recession didn’t actually change the economy itself, it simply changed what direction the money was going. The only reason Autozone increased in value is because the average household income declined. With declined buying power, people simply changed their spending habits to affect their new reality.

Let’s just say X represents the total amount of money in the United States spends on cars every year. Before the recession the majority of X was going to General Motors, and a much smaller amount was going to Autozone. Then when the Recession hits, now AutoZone is getting the majority of X, while General Motors is getting less of X. So as a result the amount of X didn’t really decrease, it just changed hands. This is a very fundamental rule of Economics. And it is a rule that has governed, and will always govern the financial world.

The Viking Shaman

Market analysis, market timing

While Vikings were notorious raiders, they were led by incredibly wise leaders. These leaders would look at what was happening in the world around them, pay attention to what “cycle” they were in, and plan their conquests accordingly. For example, a Viking shaman would start paying attention to the winter weather they were receiving. The shaman would notice it was an incredibly colder winter than normal. This would lead the Shaman to believe that England was also experienced a harder than normal winter.

The Viking Shaman would then summarize that the coastal cities of England would be hit hardest. So they would have had to exhaust their stores of food and supplies over the harsh winter. The Shaman then thinks about the cities surrounding the coastal cities. He would summarize that the more inland villages would have to start producing more resources to share with the coastal cities. The Shaman then knew the best target to attack this spring would be the inland areas, as they would have double the normal amount of supplies. So the Shaman would meet with the raiding party leaders and explain his logic. The raiding captains would agree with the shaman and really their men, and as soon an as the ice thawed, the raiders were on their way inland.

The Shaman over at Autozone also behaved in the exact same way. They saw the recession coming, then began to change and adapt their business model for a new “season.” They were rewarded for it many times over. Whereas the General Motors Shamans did NOT pay attention to the economy, and suffered a humiliating defeat in one of the largest bankruptcies in American History.

Timing Today’s Market: Reading the Runes

market analysis, market timing

While today the Great Recession is over for many, the fact is that cycles still are in play today. With the election of Donald Trump as the 44th president of the United States, has entered into a new cycle. The stock market is soaring to new highs, unemployment is shrinking, and wage growth is finally beginning to be seen.

However one must remember that the economy isn’t growing, money is just simply moving in a different direction. Social programs are being cut, government worker wages are being frozen, and many of parts of the United States government are being privatized. And regardless of the 2020 election, it’s clear that the United States is in a new type of cycle.

As a Viking Investor you will need to learn how to read the runes. To learn to see the world not in terms of asset classes and opportunities, but rather in cycles. Luckily for us we live in internet age where anyone can become their own Financial Shaman. I personally would recommend first reading books about market theory and economic conditions, before reaching for information online. Websites will often be too steeped in current events and not focus enough of the fundamental economic information.

So as the Viking investor you will need to learn to study this cycle. Much like the Shaman, you will need to try to think where is the economy going? Where is the opportunity? How can I the best profit of this current cycle? Or how can I the best survive it? Every cycle presents both opportunity and destruction. So learn to read the runes, learn to listen to the wiser gods of finance, and above all else. Do not let your personal feelings affect your judgment. You may absolutely despise President Trump, but your 401k might not mind him at all.

11 thoughts on “Ragnorck or Recession? How a Viking Times the Market

  1. Interesting analogy of the vikings and investing. I have noticed those cycles you speak about in your article and I try to head them off every chance I get. Can get overwhelming at times because nothing is perfect. But a good cycle like strategy is what every investor needs in their portfolios.

    1. Part of the Viking path is finding your own cycle.  For example, I tend to start my investing cycle every October.  Google has a big reveal where they list all of the projects they are launching for the following year.  Usually these product reveals tend to “set the tone” for the technology world.  

      Are there certain asset classes you tend to follow more than others?  I’d recommend reading my What is Invest Like a Warrior section to see the basics of all the Warriors.  Please comment back which Warrior best matches you, and I’ll create a special post about that class next week.

  2. I like the way this article ended, Don’t let your personal feelings affect your judgement, such a great quote.i  like this post a lot, you use the right illustrations and it was clearly explained in simple terms. I agree with you that reccesion doesn’t necessary means the economy is totally crumbling, it’s just means money going in different directions.

    1. My brother works in a steel mill full of guys who made BANK during the last recession.  They bought up entire neighborhoods when the Automotive industry collapsed.  I watched first hand as pipe fitters and welders become the new rich in Michigan.  It was a power lesson that money never disappears, it just relocates.

      As for personal feelings in investing, yes, don’t let them affect your investing.  I knew many millenials who were upset about the election.  But numbers don’t lie.  The stock market did get a major boost once trump go elected.  Wither or not it will remain is up for debate.  But you definitely have to make sure your making decisions based on the numbers and not the heart.

  3. This is yet another very interesting post.   I would have to agree with you that if you want to be a successful investor, it is important to objectively analyze events to consider their potential economic impact.  It is also important to pay attention to the key leaders in an organization to know how they will react.   

    Your last two sentences summed up everything perfectly.   Great website that makes investing seem like a fun challenge.   

    1. Thanks for the Feedback Sondra.

      I think the biggest mistake people make in investing is they don’t pick a strategy to guide them.  They try to hop from one money making idea to the next.  This results in meger gains or massive losses.  The goal of Invest Like a Warrior is to help people pick an investment strategy that best suits their lifestyle.  As well as give them insight into other investment styles that they are curious about.  

      Thanks for reading!

  4. Thanks for your article. I like the approach you suggest; reading up on the fundamentals is definitely good advice.  But the primer you offer on the basics of cycle theory is even better.  With that basic understanding, it’s much easier to plan ahead, and to get yourself ready to make a move.  A positive one potentially, and to come out ahead. 

    Thanks again for sharing.

    1. I’m glad you liked it. I remember when the 2009 recession hit.  I was living in the Metro Detroit area and I remember seeing so many Rich people everywhere.  I though to myself, “How are they driving hummers when people are struggling to get milk and eggs?”  

      After a little research I found that all the Automotive workers lost their homes due to be over extended on credit/second mortgages.  Cash investors bought up entire neighborhoods, and started renting them out.  I knew steel workers and plumbers who were quickly becoming the new wealthy.  

      This lesson taught me that there is ALWAYS money in the economy.  It just changes directions from time to time.  Right

  5. thanks for this very insightful post to remind us that money isn’t really added or depleted from the exomey, but rather is just changing direction.

    With that said, personally I always try to find ways to make money work for me by investing in various things and finding new ways to bring in money. That way if the economy does go down — I’ll be ready for it.

    Whst do you think the future economy will look like? Think crypto currency is going to be popular?

    1. I absolutely believe in Cryptocurrency.  

      The number one thing that drives the global economy is Shareholder Value.  Every company on earth has only 1 job, to increase shareholder value.  And right now most shareholders are older and don’t understand how much money they are losing by NOT adopting crypto.

      For example, I used to work for General Motors and we payed millions of dollars in banking fees.  We had to pay Chinese banks, Japanese banks, etc. and these fees were accepted as the cost of doing business in those countries.  But now here comes Ripple.  A cryptocurrency designed for Big Corporations to send money internationally for pennies on the dollar.  

      This means that as General Motors restructures itself, they are going to need a way to increase shareholder value.  Once shareholders begin to realize that the can have GM use Ripple to manage their overseas markets, they will save millions.  And then those millions in shavings will end up with the Shareholders.  

      So ultimately we will see a new generation of Shareholders across all industries DEMANDING crypto be used in their business transactions.  It’s for this reason alone that I still invest in Crypto.  I just can’t see a reality where Share holders are willing to accept less return by sticking with traditional banking. 

  6. The way you tie everything that is happening today back to Viking times is really interesting. I really agree with you about how there are patterns to what happens in society and you can almost predict how the tables will turn in the future with the knowledge of the past.

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