Global-Supply-Chains-are-in-Disarray-Buy-the-Physical-Items-You-Need-and-Want-Now
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00:00:30.620 | - Welcome to Radical Personal Finance,
00:00:31.920 | a show dedicated to providing you with knowledge,
00:00:33.720 | skills, insight, and encouragement you need
00:00:35.860 | to live a rich and meaningful life now,
00:00:38.000 | while building a plan for financial freedom
00:00:39.500 | in 10 years or less.
00:00:41.260 | My name is Joshua Sheets.
00:00:42.100 | Today, I want to talk with you about security.
00:00:46.140 | I want to give you a warning
00:00:47.780 | and hope to do this in the appropriate way.
00:00:51.680 | Right now, global supply chains are in massive disarray.
00:00:58.420 | They are experiencing massive stress.
00:01:02.260 | Perhaps you have noticed that many things
00:01:05.020 | that you would like to go and get right now
00:01:07.860 | are limited in quantity or unavailable.
00:01:12.960 | This is not universally true for any one market
00:01:17.000 | or in any one country.
00:01:20.280 | Rather, what you're seeing are shortages in pockets.
00:01:23.880 | And for that reason, I think there's some chance
00:01:26.620 | that perhaps you're not noticing this.
00:01:28.720 | And so thus, I want to warn you.
00:01:30.780 | But if you go looking for it,
00:01:32.720 | the warnings of the shortages
00:01:35.060 | that people are experiencing right now are abundant.
00:01:39.420 | They are everywhere.
00:01:40.860 | And they are across all kinds of industries,
00:01:44.660 | industries that you wouldn't ever expect.
00:01:47.160 | Some of these are large and quite visible.
00:01:49.880 | For example, we know that there are thousands
00:01:52.040 | and thousands and thousands
00:01:53.240 | of mostly finished automobiles sitting in parking lots
00:01:56.440 | unfinished because manufacturers can't get computer chips.
00:01:59.780 | Well, that's one little piece of data.
00:02:03.880 | And of course, that has ongoing ramifications.
00:02:06.960 | The used vehicle market in the United States
00:02:09.300 | is totally whacked out because of this.
00:02:13.860 | People are needing cars.
00:02:15.560 | And so used vehicle prices are up quite significantly
00:02:20.560 | across the United States.
00:02:23.080 | But it's also, you can find reports
00:02:25.580 | from many people for shortages on products
00:02:29.680 | as mundane as wooden pallets.
00:02:33.180 | There's stuff everywhere of shortages.
00:02:35.380 | If you go looking for the information,
00:02:37.420 | I've browsed, I don't know,
00:02:39.460 | chemicals are in short supply in some industries.
00:02:43.000 | It's just, there are widespread shortages right now.
00:02:47.200 | There are lots of stories that you can find
00:02:49.100 | of ships stacked up outside of ports
00:02:53.880 | all around the United States.
00:02:56.480 | None of these things are healthy trends.
00:02:58.680 | They are quite concerning and worrying trends.
00:03:02.420 | What's more worrying is these don't seem
00:03:05.220 | to be short-term problems that are easily fixable.
00:03:09.060 | It doesn't seem like there's anything magic
00:03:12.500 | about the date October 4,
00:03:14.260 | where all of a sudden by October 4,
00:03:16.540 | everything is going to be fixed.
00:03:19.240 | Rather, some of these problems are predicted
00:03:21.840 | to be continuing in different industries
00:03:24.100 | for perhaps even years before things
00:03:26.880 | can potentially be sorted out.
00:03:29.780 | So I wanna bring you this as a warning,
00:03:32.840 | that if there is some physical item
00:03:35.820 | that you know that you will need or want in the future,
00:03:40.820 | I would recommend to you that you purchase it
00:03:44.720 | if you can find it and if it is available.
00:03:49.400 | If there is a physical item that you know
00:03:52.200 | that you will need or want,
00:03:54.600 | I'd recommend that you purchase it
00:03:56.640 | if you can find it available.
00:03:59.240 | It's hard to see an argument right now
00:04:02.080 | as to why in the short-ish term, short to medium term,
00:04:06.480 | we can expect prices on many things to decline.
00:04:11.260 | Right now, it seems far more probable
00:04:13.780 | that prices on most physical items will increase.
00:04:18.620 | They will probably increase due to increased demand.
00:04:23.640 | Consumers adjusting the pricing in order to moderate
00:04:28.240 | that demand as they should.
00:04:30.640 | Don't call it price gouging on here
00:04:32.240 | at Radical Personal Finance.
00:04:33.640 | You know that we are firmly in favor of merchants
00:04:38.380 | being able to price their goods
00:04:40.120 | as the market makes appropriate.
00:04:42.580 | But if these stresses and if these pressures continue,
00:04:46.360 | there's a very good chance that prices will adjust.
00:04:50.820 | There's also good reason to think that prices
00:04:53.300 | may continue to adjust with future inflation.
00:04:57.300 | I have not been crying out large warnings about inflation
00:05:02.300 | because I still watch the median CPI
00:05:05.040 | and I wait for time to pass before paying attention
00:05:08.640 | to any one short-term number.
00:05:10.780 | But there do seem to be increasing markers of inflation.
00:05:14.920 | And so if we do wind up in an environment
00:05:18.620 | with increasing inflation,
00:05:21.520 | then in that kind of environment,
00:05:23.360 | of course, currency or cash is less valuable.
00:05:28.360 | And one way to protect cash is to own physical items.
00:05:34.160 | Especially durable physical items
00:05:37.880 | do not suffer from inflation.
00:05:41.080 | So if you're not paying attention to this, you should.
00:05:43.920 | What's the most actionable thing?
00:05:45.400 | Well, things like Christmas presents.
00:05:47.480 | If there's some particular thing
00:05:50.040 | that you have been planning to buy for Christmas,
00:05:53.940 | then this is a good time to go ahead and order it.
00:05:56.880 | If there's some particular thing
00:05:58.400 | that you've been on your list of stocking up,
00:06:01.000 | this is a good time to order it.
00:06:03.520 | I think that's the appropriate tone to take
00:06:08.760 | in this current situation.
00:06:11.080 | I'm not saying that catastrophe is imminent.
00:06:15.160 | I'm saying that there are tremendous pressures
00:06:17.960 | on supply chains all around the world.
00:06:21.120 | And those pressures are likely to have
00:06:23.920 | a continuing effect on the goods and products
00:06:28.600 | that you might wish to own in the future.
00:06:33.400 | So think carefully about that.
00:06:34.920 | And if there is something on your list
00:06:37.000 | that's a physical item that you want or need,
00:06:42.000 | or that you know you're going to want or need in the future,
00:06:46.000 | this would be a good time to move
00:06:47.400 | that purchase date forward
00:06:49.420 | so that there's a higher probability
00:06:51.980 | that by the time you need it or want it,
00:06:54.600 | that you will have it.
00:06:55.720 | You'll have the thing that you need or want.
00:06:58.580 | One of the things that is so fascinating to me to watch
00:07:05.480 | about the situation as it has developed
00:07:10.480 | is that the current,
00:07:14.000 | it's not wrong to call it a crisis.
00:07:17.200 | Certainly a crisis, it's a strong word,
00:07:19.680 | and I try to be very cautious in using that.
00:07:22.720 | But in some industries, it really is a crisis.
00:07:25.240 | So in some places, in some industries, crisis,
00:07:28.420 | and some places, in some industries, pressures.
00:07:31.020 | But in the current environment,
00:07:32.160 | what's interesting to see is
00:07:34.120 | this is a very long, this has been,
00:07:36.480 | and probably will continue to be,
00:07:38.640 | a very long and slowly unfolding event.
00:07:43.640 | Meaning this is happening.
00:07:50.140 | This is genuinely a difficult period,
00:07:53.200 | but it's not so acute.
00:07:54.680 | It's not a one-day collapse.
00:07:56.320 | Everything is unfolding slowly,
00:07:58.840 | and the crisis continues to unfold slowly.
00:08:02.000 | There are many reasons to be optimistic.
00:08:04.880 | It seems that we understand more and more
00:08:07.880 | what's gonna happen with the pandemic.
00:08:09.540 | We understand more and more
00:08:11.480 | kind of the direction that things are going,
00:08:13.080 | even if my previous optimism many months ago
00:08:16.880 | was misplaced due to the effects of the Delta variant.
00:08:21.880 | But this crisis is continuing to unfold
00:08:27.240 | with regard to the supply chains
00:08:28.680 | and to the pressures that the supply chains are facing.
00:08:33.680 | So don't be lulled to sleep,
00:08:35.880 | and don't be lulled to inaction
00:08:38.640 | due to watching, due to seeing
00:08:41.600 | how slowly this is unfolding.
00:08:45.040 | The shortages are real.
00:08:47.680 | I'm optimistic that the markets
00:08:51.600 | will be able to respond and to react.
00:08:54.720 | I have enjoyed watching this current crisis unfold
00:08:59.720 | because I've learned some valuable lessons.
00:09:02.960 | On the one hand, as I have warned in the past,
00:09:07.620 | the modern form of inventory management,
00:09:12.280 | known as just-in-time inventory management,
00:09:16.200 | is something that has tremendous dangers
00:09:20.360 | because most manufacturers,
00:09:24.400 | most stores don't have many reserves.
00:09:29.400 | And so there's not a lot of slack in the system.
00:09:33.000 | Most of the time, in today's world,
00:09:35.760 | a perfectly run store, a perfectly run factory
00:09:40.480 | has goods coming in the back of the store
00:09:44.440 | at the same exact instant
00:09:45.840 | that they're going out the front.
00:09:47.920 | And the modern understanding
00:09:50.520 | of a perfect inventory management system
00:09:53.360 | means that when you are ringing up your item
00:09:56.360 | in Walmart at the cash register
00:10:00.000 | and getting ready to walk out the store,
00:10:02.320 | the truck is unloading that item
00:10:05.080 | in the back of the store, and there's no slack.
00:10:07.120 | It's immediately being replaced on the shelf.
00:10:09.680 | And that's phenomenal for the efficiency of the system.
00:10:13.320 | It is such a better system for keeping costs down,
00:10:17.160 | for keeping things running smoothly.
00:10:19.040 | It's phenomenal.
00:10:20.320 | And I have been amazed
00:10:22.280 | at how good modern inventory management systems really are.
00:10:26.320 | And I think that we should acknowledge this
00:10:27.820 | because while there are dangers
00:10:29.420 | of the just-in-time inventory system,
00:10:31.280 | we've seen so many crises come and go,
00:10:33.360 | and we've seen how retailers and manufacturers
00:10:37.340 | have been able to adapt to those crises
00:10:40.720 | better than ever before.
00:10:42.200 | You look at how when storms come through an area,
00:10:46.140 | you look at how quickly modern retailers
00:10:48.440 | are able to predict what's going to happen
00:10:50.520 | and send floods of goods in that direction.
00:10:54.360 | And so on a regional basis,
00:10:56.080 | I think we can see that the just-in-time inventory system
00:10:59.420 | is much more robust
00:11:01.340 | than many people have previously predicted.
00:11:05.360 | What's happening is that slack
00:11:09.220 | has been taken out of the system at virtually all levels.
00:11:12.560 | And now you're finding that it's much more difficult
00:11:16.460 | for many manufacturers, many distributors
00:11:19.860 | to deal with the big difficulties.
00:11:23.280 | You can have a powerhouse of a retail brand like HEB
00:11:27.540 | who can predict and watch a hurricane coming in
00:11:31.780 | and can immediately divert all of its
00:11:34.660 | supply management system to deal with the needs
00:11:38.580 | that are gonna come in for that hurricane.
00:11:40.460 | But it's much more difficult for that same retailer
00:11:44.760 | to be able to affect the pace at which
00:11:49.440 | the container ships that are bringing its goods from China
00:11:52.680 | are unloaded at the port of Los Angeles.
00:11:55.260 | It's much more difficult for them
00:11:56.680 | to have any real control over that.
00:11:59.120 | And that's what we're seeing,
00:12:00.200 | is we're seeing major pressures across all levels
00:12:03.020 | of the global distribution system,
00:12:07.020 | and it's just bringing constant difficulties,
00:12:09.960 | constant shortages.
00:12:11.520 | And these shortages are affecting many businesses down line.
00:12:15.500 | So I hope I've given you my warning,
00:12:18.140 | tried to say it clearly that if there's something
00:12:20.620 | that you need or want, and that you know
00:12:23.760 | you're going to need or want
00:12:25.460 | in the short or medium term future,
00:12:28.500 | I would encourage you, go ahead and order it.
00:12:31.740 | Go ahead and buy it.
00:12:33.120 | Go through and do your Christmas shopping now
00:12:36.060 | so that if there's some particular thing
00:12:38.300 | that you really wanna have for Christmas,
00:12:39.920 | that you can get it ordered and hopefully it'll be there.
00:12:43.420 | There's really no downside if there's something
00:12:46.020 | that you're going to need or want.
00:12:47.120 | There's really no downside to simply ordering it,
00:12:49.900 | unless you just don't have any money,
00:12:52.260 | in which case, obviously, that's something
00:12:54.780 | that you don't want to do.
00:12:57.100 | I'm not saying to buy something
00:12:58.780 | that you don't need or want.
00:13:00.620 | But if there's something that you've been planning to do,
00:13:02.940 | don't hold back.
00:13:04.560 | Look at your business carefully
00:13:05.940 | and take a look at your own supply chain.
00:13:07.460 | If you haven't been paying attention
00:13:08.740 | to your own supply chains for your businesses,
00:13:11.040 | then make sure that you're doing your best
00:13:13.920 | to protect yourself against any shortages
00:13:17.640 | and protect your family against not having the things
00:13:21.040 | that your family needs.
00:13:22.420 | I don't think too much at this point in time
00:13:30.560 | about even, I don't,
00:13:37.000 | I don't wish to engage in fear-mongering.
00:13:40.160 | And so I'm trying to intentionally keep a cautious
00:13:43.520 | but level tone in this.
00:13:45.520 | I just want to encourage you, if you're not prepared,
00:13:49.040 | if there's things in your life that if you didn't have it,
00:13:52.200 | that would be a major inconvenience
00:13:54.800 | or perhaps a major safety risk, get it.
00:13:58.620 | Because it's better that you have it and not need it
00:14:03.900 | than that you need it and not have it.
00:14:08.400 | And unfortunately, these issues are quite large
00:14:12.080 | and it seems that there's a very,
00:14:14.120 | there are many good reasons to think
00:14:15.920 | that over the coming months, possibly even a year or two,
00:14:20.360 | that may take a significant amount of time
00:14:22.920 | for supply chains to return to
00:14:27.360 | what we consider to be normal,
00:14:29.800 | more smoothly functioning, fewer shortages, et cetera.
00:14:34.220 | So hopefully it happens faster.
00:14:36.820 | Hopefully there's no crisis at all.
00:14:40.060 | Hopefully the shortages simply disappear very quickly.
00:14:44.060 | I think that the good thing is we can appreciate that
00:14:47.100 | while the shortages are inconvenient,
00:14:49.180 | I don't hear any catastrophe stories, right?
00:14:53.060 | There's nobody who right now can't get any food,
00:14:58.700 | who needs food?
00:14:59.800 | There's still plenty of food available.
00:15:01.940 | But be prepared.
00:15:05.140 | This is the time to be prepared.
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