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Inspiration , Investing

Government’s Butterfly Effect – Naked in the Graveyard

July 15, 2023

Just as I turned the corner of the small building on the fishing pier, I saw a woman holding a gun to a man’s face. She didn’t see me, and I wanted nothing to do with her, as I turned around and quickly walked the other way.

This was 2004 in La Libertad, El Salvador. I was fresh out of high school and on my first solo surf trip. I picked a country rich with volcanic coastline, reeling righthand point breaks, and infested with violence that echoed from the Salvadoran Civil War that officially ended in the early 1990’s.

The day prior, before seeing the woman rob the fisherman at gun point, I had landed at El Salvador’s International Airport which is also a joint military base. When we were taxiing to our arrival terminal, I noticed an unmarked US Government passenger jet across the runway. Dozens of men with face tattoos were walking off the plane onto the tarmac.

During the late 1970’s and throughout the entire 1980’s, thousands of Salvadorans immigrated to the US seeking asylum. Instead, the US denied their requests, leaving nearly all to live as undocumented immigrants.

In Los Angeles, where most Salvadorans escaped to, life was a balance of earning under the table income and finding a place in the gangland pecking order. Throughout LA, the Mexicans, Asians, and African-Americans had already established strong gangs that controlled different areas, and sub-economies. This left the new-comer Salvadorans on their own.

MS-13, short for Mara Salvatrucha, was the answer. Originally founded by the Salvadorans to protect themselves from other gangs in Los Angeles, MS-13 has grown to an estimated 50,000 members worldwide. In addition to being a top FBI target, MS-13 is aligned with multiple Mexican drug cartels and other international crime syndicates.

Naked in the Graveyard

This first trip to El Salvador was quite an eye-opener for me. Not only did I get some of the best waves of my life, I also saw a society that was broken at its core. A couple days after I had seen the armed robbery over fish, I witnessed another alarming theft.

While surfing Punta Roca, which is the country’s most famous wave and located in the center of town in La Libertad, a fellow gringo surfer was robbed of everything. Literally, everything.

Punta Roca has an interesting set up, where the base of the point has a large fishing pier and the tip of the point is covered by a graveyard. When surfing a point break, it’s common to walk to the tip of the point, paddle out to the waves, and then catch a wave all the way to the base of the point. This strategy saves you a long paddle and can be repeated after each wave.

I had been advised by some locals that walking out to the tip of Punta Roca, through the graveyard, was a risk as a gringo. Instead, I was told to hop in the water near the pier and make the long paddle up the point. I didn’t doubt their recommendation as I didn’t want to walk through a graveyard anyway.

About an hour into my first session at Punta Roca, I discovered why paddling in the water was the wise choice. As I sat on my surfboard in the water, along with a dozen other surfers in the lineup, we all watched another surfer in the graveyard get robbed at knife point. The two thieves took his surfboard, rash guard, and board shorts.

The gringo, who obviously didn’t get the message I received, walked back towards the pier from wherever he came from – completely butt-naked.

It was surreal to watch this unfold, as if I was watching a movie or some sort of security footage. Only, this was happening in real life about a hundred yards from where I was in the water. Although everyone in the water could see what was happening, the surf and rocks that separated us from the cemetery might as well been a mile of distance.

Real Estate in Paradise

The truth is that I was young, naive, and awestruck by the natural beauty of El Salvador. Adding to my obliviousness, and being an avid surfer, the waves completely distorted my view of the location I was in.

I wanted to own a place in this surfer’s paradise. Surely, it’d be a great investment, as the area would improve and other surfers would discover what I had just stumbled across. It was just a matter of time…

Over the next ten years, I traveled most of Latin America in the hunt for perfect waves and real estate that would be a sound investment. With my search beginning in El Salvador, I eventually scouted Chile, Peru, Ecuador, Colombia, Panama, Costa Rica, Nicaragua, Guatemala, and Mexico. I ended up getting involved in a variety of projects, but mostly focused on Panama and Colombia.

I had varying success, with each country and project coming with its own unique challenges. I learned an incredible amount of lessons – most of them the hard way – and probably got the equivalent of a foreign business MBA in the process. I don’t regret all of the experiences, but if there’s one thing I learned the most about, it’s: government’s butterfly effect on everything.

(Side note: El Salvador is actually going through some interesting changes right now, as they have faced their crime head on with some extreme tactics. Punta Roca is now an official stop for the World Surf League, which is incredible considering what the place used to be like. Also, the country has embraced bitcoin, with the catalyst occurring at “Bitcoin Beach,” aka El Zonte, which is the exact place I was surfing back in 2004. That’ll be a great story to tell my grandkids one day!)

Government’s Butterfly Effect

There’s a lot wrong with western countries right now. The overall mood within the US is very fragile, with a variety of controversial topics that seem to consume our news cycle and everyday conversations. Riots in France, Spain, and even the US create a feeling of uneasiness… as if ‘the system’ is about to break and all hell will break loose.

Much of this conflict originates from government’s (mis)management strategies. Some of the conflict comes from cyclical trends, like immigration (demographic driven), workforce disruption (AI), and newly available information (i.e. transparency into many topics via Wikileaks, Twitter, and other platforms which have exposed previously hidden agendas).

Despite the foreboding shadow on the US (and other countries), remember that it’s all relative. The US still has an enormous demand from immigrants, with an ever increasing net inflow of new residents. Meanwhile, Russia, China, India, Brazil, Mexico, and others continue to lose their top performing talent and wealthy.

Government’s seemingly irrelevant actions have an enormous butterfly effect on the daily lives of its citizens. De-dollarization, compounding debt, and irresponsible fiscal policy that the US is currently plagued by pale in comparison to the struggles that other countries are experiencing.

The blood-in-the-streets moment you have been waiting for may be approaching. Remember that the fear that many will be feeling is likely the hidden opportunity. Just make sure you don’t entangle yourself with a government that causes butterfly effects to rot its society and economy to its core.