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CoronaVirus, Warren Buffett & Greed Amidst Fear

Episode #325:  CoronaVirus has created more abject terror than anything I’ve ever seen. If we’re to believe Warren Buffett, then wise investors are to be “greedy when others are fearful”. So how, exactly, can you be wisely greedy right now? I’m Bryan Ellis. I’ll tell you RIGHT NOW in Episode #325 of Self-Directed Investor Talk.

 

The world changed radically a few weeks ago. Free countries went on total lockdown. The hottest commodites in the world became hand sanitizer, toilet paper and medical masks. And the stock market went on a volatility spree never seen before or since.

And yet, the whole time, savvy investors kept hearing the famous words of Warren Buffet echoing in their minds: “Be fearful when everyone else is greedy, and greedy when everyone else is fearful.”

The question, my friends, is how to be very wisely greedy during a time when the prevailing emotion all around us is, without any doubt, not mere fear… but abject terror.

The one clear answer – well supported by history and the leadership of current experts – is to invest in well-vetted, well-operated RV Parks.

Now, in case you're not a user or owner of RV's yourself, I understand. I'm not either. Just in case you don’t know, RV stands for “Recreational Vehicle”… the big rolling hotel rooms like Winebagos.

But whether that’s “your thing” doesn't matter. Kind of like you don’t need to live in an apartment in order to justify investing in a great apartment complex.

So I’m going to make a very quick, but rather overwhelming, case to you right now that RIGHT NOW, in the height of this epidemic of terror and infection, that RIGHT NOW is the right time to jump into RV parks.

And as always, I don't expect you to take my word for it. In fact, I insist that you don't take my word for it… that's because history makes this case for me in such a compelling, unquestionable way.

Before CoronaVirus, the pinnacle example of economic downturn during most of our lifetimes was the Great Recession of 2007 & 2008… if any economic event was going to doom an industry where “recreation” is the literally first word in the name, the Great Recession would have been that phenomemon. But what actually happened?

Well… not much. As the economy of the United States slowed and weakened with each passing week, the data shows us that average length of stays at RV parks got LONGER. Not shorter… LONGER.

And I take this from a deeply authoritative source. It’s a report called “Effects of COVID-19 on the Campground Industry”. It’s written by American Property Analysts – the absolute leading valuation experts in America for the RV Park and campground industry. This report was written last week, at the request of and for the benefit of the banking industry. As the economic carnage began to mount from the CoronaVirus scare, banks who finance RV parks wanted to know where their exposure stood in connection with COVID-19, and of course, they hired the most knowledgeable experts in that field at American Property Analysts, Inc.

And according to that report, when looking at the Great Recession, it’s all summed up in this quote: “What campers did not do was discontinue using their RV's.”

That report goes on to say that “In most locales, demand exceeded available supply” and that “attendance held fairly steady”.

Now remember… the setting here is the aftermath of the Great Recession, when our country suffered the worst economic contraction since the Great Depression. It was a time when, according to the respected California-based newspaper called the Orange County Register, nearly 9 MILLION jobs were lost… 4 million homes were foreclosed EACH YEAR… and 2.5 million businesses were shuttered.

It was the worst of times for the American economy.

But what happened in the RV park industry? Well, I remind you: “attendance held fairly steady” and “in most locales, demand exceeded available supply.”

But it's better than that still: To further quote the American Property Analysts report, “Waiting lists for seasonal sites popped up nearly everywhere, and many of those lists remain in place today at the more desirable properties. Some folks even paid non-refundable fees just to be on certain lists, and some of those campers are just now nearing the front of their lines.”

If you understood me to say that the backlog of demand created during the LAST recession still exists to this day, you understand me correctly. I can't imagine how much demand and backlog the economic fallout of the CoronaVirus pandemic will create for the RV park industry… but history suggests it will be HUGE.

Am I suggesting to you that every RV park in America did a booming business during the Great Recession? No. Not at all. There will always be the superstars and the laggards, and doubtlessly that's true here as well.

But what I am telling you… scratch that… what the historical data cited by the American Property Analysts report is telling you is that, overall, RV parks as an industry hardly – if at all – noticed that a recession happened at all.

And my friends, history is repeating itself right now. And if you think about it, it makes complete sense for at least 3 strong reasons:

Reason #1: One of the immediate results of the national shutdown from CoronaVirus was the closing of National Parks. Now that's an awful thing because I, for one, realy love and frequently visit the parks in my area. But as owners of RV Parks, we aren't sad to see it. Why? National parks are one of our biggest sources of competition. Right now, that competition is completely GONE… Kaput… poof. It'll return someday, but for now, it's GONE.

Reason #2: The totally justified concern over the risk of infections connected with hotels, cruise ships and other recreational destinations likely will drive growth in the RV industry, as one's RV is a completely private space, not subject to the risk of exposure from third parties.

and Reason #3:  I'm happy to report to you that our EXPERIENCE is matching the THEORY I've shared with you, because presently, we've seen exactly ZERO cancellations at any of the RV parks that we already own… and there has DEFINITELY been an uptick in interest since CoronaVirus was declared a pandemic and the nation was put on lockdown.

My friends, I return again to Buffett's famous advice: Be fearful when others are greedy, and greedy when others are fearful. Now here’s what you might not know about RV parks: Even average ones can be incredibly profitable. Imagine if you had all of the benefits of owning a great apartment complex, but your cash flow was more like a mobile home park. Well, it’s like that, only better. Well-vetted, well-operated RV parks don't merely compare favorably to other real estate asset classes, RV Parks dramatically outshine them and the data makes that overwhelmingly clear.

So where does that leave you? If you're savvy enough to take seriously the advice of Warren Buffet, the man widely considered to be the greatest investor of our lifetimes, then the only reasonable conclusion you can draw is this: These are times of great fear… and that's your signal to be wisely greedy. And there's no better asset class – as proven by history – for that wise greed he recommends than RV Parks.

The time is now.

Thank you for listening in today. Every now and again, we encounter exceptional RV park investment opportunities. Best for well-qualified investors, these opportunities always fill rather quickly as only a small number of openings for outside investor partners are made available. If you'd like to be considered for participation in the next such project, please send an email now to [email protected], that’s [email protected], `to set an appointment to speak with me or a member of the team. Happy investing!

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