TRAIN Z332, CARRIAGE 6, SEAT 114 – This is the worst.

Third class on a crowded Chinese train for 16 hours. People are smoking. Nearby, somebody is watching loud videos on their phone. The chairs on this train are too upright to sleep in… so I’m writing you instead (and taking pictures). It’s 2:24 a.m…


Kate and the kids trying to make themselves comfortable on the train

Remote Regions

Greetings from somewhere in the middle of China.

We were in Chengdu, the capital city of Sichuan Province, for a few days. We saw pandas, ate spicy Sichuan-style food, and went to the opera. A few hours ago, we went to the train station and caught a westbound train…

We’re entering China’s remote regions now, where it’ll be less populated and less developed. Next stop: Xining.

This is the most uncomfortable passenger train I’ve ever been on. But that’s okay. We’ve traveled almost 20,000 miles by bus and rail since we left home. We’re pretty used to it now. Only 11 hours left…

Construction Carnage

Just read a great blog post by hedge fund manager Harris Kupperman, who lives in Miami. He says Miami real estate prices are about to collapse…

“The pace of decline has clearly accelerated recently,” he says. “Most properties on South Beach (where I live) are off by 20 to 35% from peak prices, but that is nothing compared to the carnage across the bridge in areas like Brickell and Edgewater…”

“The basic law of Miami condo pricing is that if prices stop going up, they collapse…”

Cement Shells

I did the same analysis on Miami in 2006. I went to Miami; talked to brokers, analysts, condo investors, and developers. I came to the same conclusion.

A few months later, Miami real estate prices DID collapse. I even picked out two banks with big exposure to Miami developers that I said would go bust. Both of them did go bust.

Anyway, here in China I see a “Miami construction boom” in every town we pass through. It’s astonishing. We see dozens of high-rise cement shells with cranes on their roofs every hour. It’s like Miami x50.

Surely they’re overbuilding? Surely prices are too high to clear all this supply? Surely, as in Miami, because of the maintenance fees, once prices start falling, they’ll collapse? And surely the banks, who loaned all the money to finance these projects, will collapse, too?

– Tom Dyson

P.S. I tried to capture the construction boom here in pictures from the train today. (The train is the best place to see it.) These pictures all come from ONE CITY, the city of Lanzhou.

By population, Lanzhou is the 40th-largest city in China.

Every city and town we’ve been to in China looks the same as this right now…






Reader question: I have a question about these empty concrete cities in China. In one of the pictures you sent, all the buildings on the left side have a crane next to them. On the right side, no cranes, but the buildings still look like shells with no interior features. Are these buildings an active work in progress in your opinion, or are all or some of these buildings construction ruins? People have been talking about a property crash and debt implosion in China for the last five years and it never seems to come…

Tom’s response: I think they’re active construction. There’s going to be an economic bust here, as I wrote above, but it’s not here yet. I don’t see any signs of financial distress in China. People are out shopping like crazy. Construction is booming. We see a few homeless people and beggars on the streets, but much fewer than you’d see in America.

I have no idea if they’ll sell all these apartments, and if so, at what price, but right now, there doesn’t seem to be a problem.

Reader question: I have to ask you a question. I am a big follower of Postcards From the Fringe. I’m curious why you always refer to Kate as your ex-wife. Does it hurt her feelings that you keep telling the world she’s your ex every time you mention her name? That can’t be good for the kids.

Tom’s response: Good question! I just read your message to Kate. She says she likes being referred to as “ex-wife.” “At least you’re acknowledging me now, which is more than I got for the last five years,” she says, with a wry smile.

For my part, I use the term “ex-wife” to denote that we’re divorced without having to explain it in every post. We want readers to know we’re divorced. We feel it’s an important piece of this story, and it sets us apart from other traveling families. I realize that it’s not the most flattering term, but as long as Kate doesn’t mind it, I’ll keep using it (until we get married again, that is, when she’ll become my “second wife.”)

Reader comment: I am not as bearish on the stock market as you are. For my long-term (index-funds) portfolio, I try to follow the broadest investment strategy possible: I want to be long on the stock market all the time with only one exception – when the public and all the pundits get extremely excited about the market and taxicab drivers are putting their money in the market and giving you free stock advice. I don’t see us at this point now.

Tom’s response: I’m not necessarily bearish on stocks on a nominal basis, although that’s probably my bias… at least on an inflation-adjusted basis. Like in the ’70s.

My big bet is that gold does better than stocks, regardless of what happens to either one in isolation.

I understand your point about the taxi-driver indicator. That was the case in 1999, when the Dow-to-Gold ratio peaked. I don’t expect to see that type of sentiment again in my lifetime. At least not in the next 30 years.

The next sentiment extreme needs to be a bearish extreme. Where the taxi driver is recommending gold. And no one cares about stocks. Price-earnings (P/E) ratios should be in the single digits. And the Dow-to-Gold ratio needs to be below 5.

I reckon that’s still a couple of recessions, a currency crisis, and five to 10 years away.

In the meantime, I prefer sitting on the sidelines in gold, traveling the world, having fun, and not getting wrapped up in all the daily twists and turns.

Reader question: Thank you for your honesty in your post about depression. I continue to admire you for sharing your struggles.

Are you ever worried the anxiety and depression will resurface?

Tom’s response: Yes, I worry Kate will change her mind about marrying me, I will have to go back to living on my own, and my depression will come back.

Reader question: We are so impressed with your family and traveling experience. Keep the stories coming! Gold does not pay dividends, so do you have some income-producing stocks or bonds to pay your expenses?

Tom’s response: No. We are spending our savings. We put a few thousand dollars aside to pay for our travels before we went to gold.

Reader comment: I am new, so sorry if this was covered earlier in your postcards… How is it that you are making this challenging around-the-world journey, enriching your children’s exposure vastly (great parental move)… all with your ex-wife?

Tom’s response: I asked Kate to remarry me a couple of months ago and she said yes! We’ll get married (again) next year sometime. Here’s the full story.

Reader comment: I am very positively interested in your trip with your ex-wife/wife-to-be and your three homeschooled children. Very interested to see what happens next…

I give you credit – that is certainly a different life style!

Reader comment: Kudos on the homeschooling. I am starting late in life to have a family, and I plan to educate my future kids at home myself. I have even started collecting what I consider to be essential resources for when the day arrives…

Reader comment: Thank you for bringing exciting and very interesting reports about your family travel to my tired old life. I would never have the guts to do what you are doing. You really know how to live. I salute you.

Reader comment: You made a comment in one of your recent postcards, that while “home (world) schooling” your kids, you had no intention of sending them off to college at the appropriate time. Bravo and kudos to you. Your kids will do great, no doubt. Keep traveling and learning!!!

Reader question: I’m fascinated by both your postcard travels but also by your ability to pull yourself out from what I am piecing together as burnout and depression. I myself am struggling with burnout and depression. If you would care to share more of your personal struggle, it might help others like myself…

As always, send your questions and comments to [email protected]. You can also shoot our customer service team a note here anytime.

Your messages are an integral part of this project. But don’t worry… I’ll never reveal your identity if I decide to republish your note.