Chapter 63 Strategic Guidance
"I don't know," Skyler admitted reluctantly.
Skyler was a man of integrity and would never pretend to know something he didn't. Though he hadn't read many books, he understood the importance of self-awareness.
Skyview's simple question had stumped him, forcing Skyler to admit his ignorance.
"It's actually quite simple," Skyview said. "Real estate is a reservoir for the economy!"
"A reservoir for the economy?" Skyler looked puzzled. "What does that mean?"
Skyview continued, "Mr. Everett, you're much older than I am. Do you remember how much an average worker earned when you first entered the workforce?"
Skyler recalled. "Back then, the country was poor. If a worker made a few hundred dollars a month, that was considered good."
"And now?" Skyview asked.
"Nowadays, it's probably a few thousand dollars. A skilled worker might make over ten thousand dollars," Skyler replied.
"Do you see the problem?" Skyview asked.
Skyler thought for a moment and said, "Money has increased?"
"Exactly!" Skyview explained, "With the country's development, productivity has indeed improved significantly. However, the amount of money has also increased, which lowers purchasing power. And since you and I are capitalists, let's be honest. Most of the increased money ends up in the hands of people like us. That's why ordinary people's incomes barely keep up with inflation."
Skyler said, "The wealth gap is indeed quite large. So what?"
Skyview continued, "From a national perspective, money is already flooding the market, yet the country continues to print more. Do you know why?"
Skyler said, "Isn't that called 'flooding the market'?"
"Yes," Skyview said, "The country prints more money because there are too many investment projects and debts to the banks. Printing money is the quickest solution. Naturally, as we accumulate capital, wealth distribution becomes imbalanced. With more money being printed, a dangerous situation arises: capital floods the market, but ordinary people's incomes don't increase significantly. Capital seeks profit; otherwise, it can't maintain its value. To seek profit, capital must be invested, right?"
"That's correct," Skyler agreed.
Skyview continued, "In this world, everything revolves around food, clothing, housing, and transportation. The government doesn't allow capital to speculate on food and clothing because it would cause chaos if people couldn't afford them. Transportation also can't see a large influx of capital because cheap transportation benefits national development. So, which sector is suitable for capital investment?"
"The housing sector!" Skyler's eyes lit up. Suddenly, he felt that his long-standing confusion had been resolved.
With a satisfied expression, Skyview said, "Exactly, housing! Housing is real estate! Houses are inherently expensive luxury items. The flood of capital into real estate has driven up housing prices. Real estate acts as a reservoir for the economy, absorbing the excess capital. If food prices rise, the whole country would be in chaos, but if housing prices rise, people won't complain too much."
Skyler suddenly understood. "So, the flood of money is like releasing too much water, and we need a reservoir to contain it. Our real estate industry is that reservoir. The foundation of real estate is land, which is owned by local governments. They sell us the land and naturally push up housing prices to make more money. That's why real estate was so profitable back then, and housing prices skyrocketed. It all makes sense now!"
Skyler, being a successful self-maker, quickly grasped the key points once Skyview explained them, and he immediately understood the economic structure of the real estate industry.
Skyview said, "But Mr. Everett, is there any reservoir in the world that can never be filled?"
Skyler sighed. "Of course not!"
"Exactly," Skyview said. "Housing prices are too high, and the reservoir is too full. Now, housing prices are so high that even two generations can't afford them. At this point, the reservoir needs to release some water. Building houses absorbs capital but doesn't contribute much to productivity; it's just a local industry. The country's goal now is to stabilize housing prices and redirect excess capital into upgrading manufacturing and the internet. So, your real estate industry has no future. Not only is it difficult now, but it will also become increasingly difficult in the future!"
"Mr. Scott, you are truly talented!" Skyler looked at Skyview with admiration, thinking that Dylan had indeed chosen a worthy successor, someone who seemed unremarkable but was actually very talented.
Skyview said, "Real estate is tough. With your wealth, Mr. Everett, you'll eventually be crushed by billion-dollar companies if you don't plan ahead. If you don't make moves now, you might end up bankrupt."
"Plan ahead?" Skyler's interest was piqued. "Mr. Scott, do you have any good suggestions?"
Although Skyler lacked a broad economic perspective, he was very astute in dealing with people. He knew that Skyview wasn't just giving him advice for no reason; there must be another motive.
Skyview said, "What do you think of Lakeview Express?"
Skyler laughed and said, "Are you suggesting I go into the delivery business? The real estate industry may not be prosperous, but the delivery industry is highly competitive and not necessarily promising either!"
Skyview shook his head and said, "Whether it's real estate or delivery, working hard to make money won't earn you much, and it's too exhausting. My view is to come up with a new concept and then find a way to go public and trade stocks. That's the only way to make big money!"
"Trade stocks?" Skyler asked. "For a small company like Lakeview Express?"
"Lakeview Express alone doesn't have much room for speculation," Skyview said, "But what about the sharing economy? Mr. Everett, you're not ignorant. You must know how hot the sharing economy is right now. Major capital is pouring into it like crazy. Capital is very sensitive; once it smells an opportunity, it moves in!"
Log in with Google Account
Chapters
Favorite
Settings
