It Pays To Prepare: My Lesson From Post-Communist Hungary

I never thought bribing border patrol would be on my bucket list. But life takes you to places you never really plan for.

It was the summer of 2004. I was on a 3-week backpacking trip through Eastern Europe. Prague. Vienna. Budapest. It was a great trip overall.

It was my own version of Planes, Trains and Automobiles. And it was while on an overnight train heading to Budapest I had an encounter with Hungarian border patrol.

Every so often, the train would stop for a passport check. One of these stops took a little longer than usual.

Agents stopped outside my sleeper car and asked to see my passport. Obviously, I obliged. I handed it over thinking it wouldn’t be long before I could go back to sleep.

Then another agent appeared. This time, they were flipping pages back and forth. Back and forth. Then a little more slowly. Scrutinizing every page. Every stamp.

I didn’t think anything of it. My traveling companions and I – who didn’t’ speak Hungarian – had little idea what was happening.

As more and more time passed, the agents looked more and more confused. We were confused. And no one could communicate with one another.

After what seemed like hours – but was maybe about 10 minutes – the conductor said it was time to go. The train had a schedule to keep. 

But the border agents continued to scrutinize my passport. They threatened to take us off the train. Which meant we were about to be stuck in the middle of nowhere in Hungary.

Finally, a third agent that spoke broken English showed up. Again, my passport got another look. This time, he pointed out the problem. A stamp was missing on my passport. They wanted to know why.

There was no real good answer other than they forgot to stamp it. That didn’t get us very far. The threats to throw us from the train continued.

But if there’s one thing that’s for certain, if there’s one universal language in the world, it’s cold, hard cash. Time was short. The conductor: agitated. And the agents just wanted to leave the train.

So using the universal sign language for cash – rubbing your thumb against your index and middle fingers – these agents were ready to play ball.

At the end of the day, all it cost was a 40 euro “fine” each. 120 euros in all. And…POOF!...the problem disappeared.

Sometimes you find yourself in compromising situations. Whether that’s on a train in Hungary…or caught out in the middle of a rainstorm without any shelter.

It’s how you react and adapt to those situations that determines what happens next.

In this case, having some cash saved me from a night in a Hungarian klink.

My misadventure in Hungary – and other parts of Eastern Europe – turned out to be one of the best trips I’ve ever taken.

Despite having to pay off the Hungarian border patrol to be on my way. Or adjusting my plans after witnessing a bloody bar fight in a small town in Slovenia.

It also taught me some valuable lessons.

For starters, it taught me that there are always things that pop up that you can’t account for. You can’t predict where life ill take you. Or how events unfold.

But you can prepare. It pays to have something set aside to smooth out any bumps you might face.

That could be a stockpile of food. Or an extra umbrella in your car.

And what’s true for life’s little – or big – surprises is also true when it comes to your finances. In this case, preparing to protect your hard earned dollars from events outside of your control.

Like having a stack of cash on hand. It can get you out of a jam in a hurry. Or be there for an emergency that pops up out of nowhere.

But it’s not the only thing. Its use only goes so far.

Years ago – as I started down my path from an engineer to a professional investor – I learned that there are even better instruments. Even if they don’t make sense to your average person.  

Take gold as an example. I’m talking about real, hold-in-your-hand gold. Like the coins I’m holding in my hand in the picture below.

Most people I know have never owned gold as a form of financial protection. All they have is some nice jewelry.

Back when I made the plunge and bought my first ounce, I didn’t really know what I was getting into. But when you hold it in your hand for the first time, there’s almost no better feeling in the world.

It’s real wealth. And it’s been a store of value for thousands of years.

More important, it makes me sleep easy at night knowing my small hoard of gold is there to back me up in case of emergency...just like having those 120 euros to pay off the border patrol.

What I mean by that is gold is a tried-and-true hedge against inflation. As things seemingly get more expensive, the value of gold adjusts to account for that. It helps you keep your purchasing power.

Just take a look at a chart of gold below. It’s one of the most beautiful charts in the world today.

Compare that to the value of the dollar, which lost about 50% of its value over the same period.

Basically, as the value of every dollar declines over time, the value of gold is more than keeping pace.

But it’s not just gold anymore. It’s also bitcoin.

In its early days, bitcoin was a wild concept. A finite supply of digital “coins”? And to get those “coins” you need to mine it by solving an algorithm?

But over time, it changed from crazy idea to something more.

You see, bitcoin isn’t just some fancy computer code. Or that thing that your friends own that you don’t understand. It’s a real asset backed by real money. I’m talking institutional money from the likes of Blackrock, Fidelity and many others.

But more than that, it’s an asset that’s all of a sudden leading to one of the greatest wealth transfers in history.

Something I even saw firsthand after attending the annual Bitcoin Conference in May.

Consider that in 2015, the average home cost $289,200. Today, that’s jumped to $416,900 in part due to a flood of money hitting the market from years of loose monetary policy.

That’s what happens when you hold interest rates at near-zero for too long.

But measured another way, the average home cost 1,266 bitcoin in 2015. Ten years later, it costs just 3.5 bitcoin.

Clearly bitcoin more than kept pace with the eroding purchasing power of the dollar.

The point is having a backup plan matters. Whether you need to give a little “kickback” to the border patrol. Or save your purchasing power by owning a little bit of insurance like gold and bitcoin.

It pays to prepare for the worst. And it eventually let’s you take bets on speculative plays like the ones I recommend to Premium Members in Strategic Trader.

The good news is you don’t need to go all-in all at once. Buy a little gold when you can. Buy a little bitcoin too. You can even start with just a few dollars here and there.

Over time, it will add up. And I bet you’ll notice that you’ll sleep easier at night. You’ll worry less. And you’ll have the confidence to go out and build more wealth from your hard earned dollars.

Regards,

Editor, Strategic Trader