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Are You Financially Prepared For A Zombie Apocalypse


By Tom Hatton

I am a financial adviser with over 30 years of investment expertise under my belt, and like many of you I’m worried about the future. In fact, I believe we could be heading for what some call a zombie apocalypse, not because I believe in zombies, or that it’s time for the apocalypse, but because there are a growing number of potential crisis driven scenarios taking place right now that could lead us to the same conclusion. Being a fiduciary, I have an obligation to provide the best advice I can for my clients. So, in addition to investing my clients in high quality blue chip stocks, I have also read volumes on how to store food, get guns, build bunkers, assemble bug-out bags, and purchase rural property, all of which I recommend to them, up to a point. After all, I’m an Eagle Scout and being prepared is still my motto. If you agree with me that the canary in the coal mine has stopped singing and in fact is looking pretty sick, other than those constant and obnoxious commercials hyping gold, I have found very little useful advice on how to prepare financially for that potential societal unraveling.

050901_lootsign_news_hmed_1230p.grid-6x2What I have read is pretty gloomy, assuming we will fall into decades of pre-industrial age kill-or-be-killed, Mad Max type of existence where barter, weapons, and anarchy will rule the day. But is being thrown back into the financial dark ages inevitably going to be the case? I don’t think so. In fact, I believe the standard post-apocalyptic gloom and doom could be all wrong. In order to better understand where I am coming from I think we need to break a zombie apocalypse into two phases, first the crisis phase, and secondly life after the crisis has passed.

When the major global disruption occurs I anticipate a window of six months to a year of total disorder. This is exactly what we are prepping physically for. In a crisis our current dependency on a just-in-time food delivery system will guarantee failure taking just days for the stores to be emptied. Then there will be panic, anarchy, and murder when people realize the government will not be riding over the hill to save the day. Rich and poor, neighbors, friends, brothers and sisters will find themselves effectively zombie-like, meaning desperate people wandering the streets not necessarily looking for brains, but for food and water as they struggle to survive. And because they are not prepared, many will not.

plagueThere is actually a historical precedent for a rapid die off like this. It was the plague that gripped Europe during the Dark Ages. Societal devastation arrived quickly and within a few months between thirty to forty percent of the population of many communities were gone. But here is the important point, and a lesson of hope that we can and should learn from history. Scientists who have studied pre-plague bones of average people and compared them with post-plague bones see a remarkable difference between the two. The bones of the post plague survivors and their families appeared to be much healthier on average than the bones of those living and dying before the plague. In other words, scientists could tell from the bones that the health and well-being of Europeans improved dramatically after the plague.

With a significant portion of the population gone, every survivor becomes a valuable community resource. Land was readily available, and when food production did kick in it was plentiful because of the reduced population. So for those lucky enough to have survived the plague, life was pretty good. Especially for those who understood what was happening and had means to marshal together resources to utilize for their benefit after the plague was over.

Remember, if a zombie apocalypse happened today, the cars do not go away. The power lines and cell phone towers will still be here. Flat screen TVs will remain on the walls of abandoned houses, and the first thing that will probably turn on after the electricity is the internet. Just think about all of that accumulated stuff in garages across America, wasting space right now where the cars should go. All of that stuff will be available to the survivors, very cheap, and probably on some E-Bay type site. This means a post-apocalyptic world would be extremely deflationary, meaning there will be too many goods available to a very few people, and prices of everything will drop precipitously. So the key of success in a deflationary world is to own the right kind of capital, and understand the concept of purchasing power.

financeWhat is the right kind of capital? Good capital maintains some purchasing power, meaning even though people will have fewer dollars to buy it, they still want, need, or recognize the value that is there. So as long as there are people alive, there will be marketplaces to trade and transfer your good capital into other forms of tradable commodities. Importantly, good capital should be completely in your name, because you should be able to verify ownership of it, and should not be encumbered with debt. Good capital consists of things which are useful or needed, scarce or difficult to come by. Bad capital disappears in a crises, like what will happen to the value of the equity in a home with a large mortgage, or bonds, annuities, or any other leveraged or debt based assets.

People can also be good capital. Capital can be a network of friends possessing the skills to make products or services that other people will desperately want or need. Intellectual capital, or knowing how to rig electrical systems, provide health care, fix plumbing, dig wells, fix cars, or grow food could be more valuable that gold. Any useful survival skill will be marketable to someone who wants to survive, and this is the kind of capital you want to accumulate now in preparing yourself for a crisis.

What is so important about purchasing power? Purchasing power is a reflection of what you can buy for a dollar. Our lifetime has been mired in an never ending spiral of inflation, meaning your dollars each year buy less. In deflationary times the opposite is true. You can buy more with a dollar, but dollars are harder to come by. So here is an example of what I mean by owning assets that can maintain purchasing power. If your stock portfolio is worth $ 500,000 before the crash, and only worth $ 50,000 after the crash, the number of dollars reflected in your assets has declined and are now worth ten cents to the dollar. But have you lost any purchasing power? Not if that empty house that used to be worth $ 250,000 can be purchased for $ 25,000, or that relatively new car could be picked up for $ 500 when there are thousands of relatively new cars sitting around unowned. There are fewer dollars around, but everything cost so much less your purchasing power has actually maintained itself. This is why I believe a diverse portfolio of blue chip stocks has a very good chance of surviving a crash and maintaining some form of purchasing power after the dust settles and the new economy takes off again.

You need to know that timing is also important. Early on the best capital to own could be food, fuel, ammunition, toilet paper, cigarettes and alcohol, working cars and equipment that are easily trade-able and will help you survive. But as the economy recovers, and it will, our amazing capitalistic system will reward businesses with good cash reserves so they can shift into production and start to bring us back from the brink. The reality is most of our immediate needs could be met fairly quickly once workers return to their jobs. Remember the comparison of the plague? Once willing hands put their fields into production food became plentiful. Many of these initial survival items that were so necessary during the crisis will start to rapidly accumulate and as a consequence drop in value. So don’t overdo it. The factories and the ability to produce things in mass quantities are still there and will be available to meet the post-apocalyptic demand. They will simply need people to realize the end of the world is not quite here and go back to work.

If you truly believe in being prepared, don’t just prepare to survive the first stage of the zombie apocalypse. You should focus some effort and energy into accumulating the right kind of capital in order to thrive after everything settles down. But here is the kicker. Unlike bad capital, good capital has utility no matter what happens. So accumulating good capital now assures you with some success if we miraculously avoid a zombie apocalypse. But if everything does fall apart, good capital retains purchasing power and eventually there will be markets trading it. This is the financial perspective I prefer. A win-win proposition. You win if you are right, and you win if you are wrong. So do not hesitate in accumulating good capital!


thomasThomas E. Hatton

Born in 1957 and raised in Louisville, Kentucky, Mr. Hatton graduated in 1981 with a Bachelor of Science from Brigham Young University in Family Financial Planning and Counseling. This major combined a business management minor with marriage and family therapy coursework and was modeled around the curriculum of the College of Financial Planning in Denver, Colorado.

Mr. Hatton has been actively involved in individual stock and bond portfolio management, financial planning, trusts and estates, and investment research for over thirty years. In the first twenty years of his career he worked at Bank One as a Senior Vice President and Alternate One Group Fund Manager, Community Trust Bank as a Vice President and Senior Investment Officer, and as a Senior Trust Investment Officer and Branch Manager of Raymond James Brokerage at Ohio Valley National Bank & Trust Company.

In 2000 Mr. Hatton left banking and started his own investment company, Private Asset Management. Mr. Hatton has specializing in individual stock and bond portfolio management for private individuals and is the President and owner of Private Asset Management, LLC, a Registered Investment Advisory in the Commonwealth of Kentucky. Mr. Hatton can be reached by simply calling his cell phone. 270 860-0109. If you have a question you can email him at questions@privateassetmanager.com

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