How to Protect Life and Wealth in Turbulent Times | Bill It Up Memo

I recently recorded a podcast about how people lose or preserve wealth during chaos, and I find it very insightful for today’s life. Below is the Chinese content for reference. Many parts are from ###, and interested friends can go buy and read it.

My biggest takeaway is that everything has “becoming, staying, decaying, and emptiness.” With causality, there is arising and cessation. We should strive in everything, but ultimately accept that “all things are impermanent.” In times of great change, even the Russian Tsar’s entire family was insignificant, and in the end, they were all exterminated.

Location, location, location

Say it three times. Choosing the right geographical location is crucial; otherwise, at best, your assets could become zero, and at worst, your entire family could be wiped out.

• a. A Jewish family split into two routes during WWII. One fled to France and was wiped out, all sent to concentration camps. The other relatives escaped to Portugal and survived.

• b. In 1943, many Nazi officials secretly transferred funds to South America. They didn’t transfer to Eurasia or the US, which was the right choice at the time. Of course, they were later held accountable in South America after the war—that’s another story.

• c. Most residents of the Soviet Republic in 1991 saw their assets wiped out overnight because most ordinary people were fully invested in the Soviet system.

If you’re in trouble, observe the signs and make your own judgment

Think about who is winning the game? In 1942, Nomura Securities had already sensed Japan might be losing the war. They observed shortages of food domestically, and even the fences around the imperial palace parks were being dismantled for iron. Despite newspapers and radio broadcasting only good news about the war, Nomura noticed many navy officers and pilots involved in Midway and Coral Sea battles had mistresses. When they didn’t return, their girlfriends started to panic.

The Nomura family sensed danger and began gradually selling stocks and even shorting. But as a Japanese financial group, they couldn’t reallocate assets to the victorious countries. So, they asked themselves: if Japan loses and rebuilds after the war, what should they hold now? They believed land and real estate would be the best hedges, so they bought commercial and residential properties. These assets provided funds for Nomura Securities’ rapid expansion after the war, eventually making it one of Japan’s leading securities firms.

Germany’s case

In the 1930s, many German Jewish aristocrats trusted their country, believing “we are Germans, and the storm will pass soon.” They had assets, status, social recognition, and no urgency to leave their homeland.

But their judgment was shattered quickly. After the Nazis came to power, Germany imposed strict foreign exchange controls, with taxes as high as 78% on transferring assets abroad. By 1938, after the “Night of Broken Glass,” more and more people realized they had to leave. But by then, it was too late—visas were hard to get, funds frozen, and many were trapped inside the country.

This history reminds us: When you think “no need to leave now,” it might actually be the moment you still have a choice. — Einstein made a good judgment early on and emigrated to Princeton to teach.

In chaotic times, never go all-in

• a. In 1937, even Churchill was attracted by the US bull market and used leverage to go long. By 1938, he was margin-called. Later, he paid off his debts through continuous writing and publishing.

• b. Many wealthy Jews in Germany had most of their assets exposed in Germany (real estate, businesses, currency). They gradually became “boiled frogs”—the later they left, the more they were reluctant to abandon sunk costs, and finally, they lost everything, including their money and lives.

• c. Today, it’s even more evident. The average lifespan of companies in the S&P 500 has shrunk from 35 years in the 1950s to 10-15 years now.

  • 1958: The average lifespan of S&P 500 companies was 61 years;
  • 1980: It dropped to about 30 years;
  • Around 2020: It’s down to approximately 18 years;
  • Forecast for 2030: Only about 12 years.

Be aware of “self-custody” and “third-party custody” risks

Think about the restructuring of political systems and wealth in major upheavals: in essence, all property documents could become invalid. Your bank deposits, gold holdings, and real estate are all under third-party custody. Many might think property should be in their name, but in reality, it depends on local government recognition of your ownership documents. So, in essence, you are also trusting a government.

• a. During WWII, Polish aristocrats’ estates were confiscated by Germany. After the war, they thought they could reclaim them, but Poland was transferred to Soviet influence per Yalta agreements, changing the regime and invalidating private property rights. Over the past 3-4 years, Russian oligarchs’ assets in NATO countries have been frozen. When sanctions are imposed, the hardest assets to move are real estate in London and New York.

• b. During WWII, Japanese assets in the US were frozen or confiscated. After Japan attacked Pearl Harbor on December 7, 1941, and the US declared war on Japan on December 8, the US quickly froze Japanese government, corporate, and personal assets. About 120,000 Japanese Americans (two-thirds of whom held US passports) were sent to internment camps. Many families’ properties, farms, and businesses were sold at low prices or lost before they left, and most couldn’t recover these assets after the war.

• c. After WWII ended in 1945, Yugoslav Tito’s government ordered the collective deprivation of German nationals’ nationality and property rights in Yugoslavia. They were regarded as war criminals and stripped of land, property, and civil rights. Thousands of ethnic Germans (including children and the elderly) were sent to labor camps, with an estimated 50,000–60,000 deaths. Between late 1944 and 1946, systematic purges occurred: German men were forced into labor or executed on the spot; German women and children faced rape, abuse, and slaughter.

About gold storage (self custody? Or third-party custody?)

Jewish gold stored in French bank safes was confiscated by Germans after their occupation. However, gold buried in secret locations known only to the owners was preserved after the war.

• a. I also heard an interesting story: a Jewish family not only kept 10% of their wealth in gold but, due to the experience of confiscation during WWII, they mostly kept their gold in self-custody, exchanging most of it for coins rather than bars. Because coins allow small payments, they could pass through checkpoints and escape war zones more easily.

• b. In 1939, about 20% of the wealth of most French families was in gold bars, stored either in Switzerland or buried in castle courtyards. Using gold as a hedge against disaster in that era had three issues:

  • First, selling gold required finding genuine buyers or black market traders. In a society full of informers and traitors, anything could happen—you might end up stabbed in an alley or imprisoned by the Gestapo.

  • Second, both legitimate and black market buyers would pay significantly discounted prices, and without a public trading market, this was unavoidable.

  • Third, if you stayed in occupied France, you had to hide your gold. From fall 1940, all French banks had to report safe contents to Germans. The occupation authorities issued promissory notes, “borrowing” the gold, which was then shipped to Germany. After the war, these promissory notes were not redeemed because Nazi records were destroyed in Berlin’s defense. As the Allies advanced toward Paris, all remaining gold was confiscated by German officials to help them evade impending disaster.

Overall, in the chaos of the last years of the war, buried gold in the backyard was more secure and valuable than other assets like real estate or businesses. The history of WWII teaches us not to keep gold and jewelry in domestic bank safes.