Dear Reader,

New York City Mayor Zohran Mamdani recently celebrated one of his signature economic policies becoming reality:

A rent freeze covering roughly one million apartments.

I understand why that sounds appealing.

Housing has indeed become much more unaffordable.

So when rents keep rising, the political response is predictable:

Stop landlords from raising them.

Once again, the assumption is that the market created the problem – so the government needs to restrain the market to fix it.

But take a look at what’s happening about 190 miles south in Baltimore.

As the Wall Street Journal reports…

Investors are now getting into bidding wars over abandoned houses that nobody wanted for decades.

One of them is Chris Waldron, a plumber who invests in real estate on the side.

He recently paid $45,000 for a vacant row house, plans to spend another $130,000 fixing it up, and hopes to sell it for more than $300,000.

A few years ago, this deal probably would not have made sense.

For decades, Baltimore had around 16,000 vacant homes.

And there was a very simple reason so many of them stayed vacant – the math simply didn’t work.

It cost more to renovate these houses than buyers were willing to pay for them afterward.

You can have all the redevelopment plans you want.

But if somebody has to spend $175,000 creating a house that buyers will only pay $140,000 for…

Nobody is going to keep doing that for very long.

Today, the economics have changed.

Baltimore now has fewer than 12,000 vacant homes.

And one of the forces helping drive that turnaround…

Is the exact same housing affordability crisis politicians are trying to regulate away.

Housing elsewhere has become so expensive that Baltimore suddenly looks a lot more attractive.

The median home there is around $235,000, compared with roughly $381,000 nationally.

People priced out of Washington and other expensive markets are starting to look elsewhere.

That creates demand in Baltimore.

And once buyers are willing to pay enough for a renovated home, people like Waldron suddenly have a reason to take an abandoned shell and turn it back into something useful.

That gets to something I think is badly misunderstood about free markets.

Problems Create Opportunities to Solve Them

Waldron is not fixing that house because he feels sorry for Baltimore.

He wants to make money.

That’s perfectly fine.

In fact, it’s exactly what we want.

Because that potential profit is what gives him a reason to put roughly $175,000 of his own capital at risk fixing a house nobody wanted.

Austrian economist Israel Kirzner called this entrepreneurial discovery.

It’s the ability to spot a gap between what something is worth today…

And what it could be worth if put to better use.

Most people see a boarded-up Baltimore row house.

Waldron sees what could become a $300,000 home.

If he is right, he profits. If he is wrong, he takes the loss.

And while he is trying to make money, something useful happens along the way:

An abandoned house becomes housing again.

That is one of the great strengths of capitalism.

You do not need people to solve problems out of charity when you can make solving the problem profitable.

Adam Smith put it better more than 200 years ago:

“It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.”

And Baltimore is showing us what that looks like in real time.

The housing shortage pushed prices higher elsewhere.

Those higher prices made Baltimore comparatively attractive.

That brought in more buyers.

More buyers made rehabbing neglected homes financially viable.

And the end result is that boarded-up houses that sat empty for decades are becoming homes again.

This is What Free Markets Do Extremely Well

They adapt.

When something becomes scarce, its price rises.

That hurts. I’m not pretending otherwise.

But the higher price also creates a bigger reward for anybody who can find a cheaper substitute, add new supply, or put wasted resources back to use.

Politicians often see the higher price and immediately want to suppress it.

Entrepreneurs see the same situation and ask:

How can I profit by giving people another option?

That is how the system adapts and progresses.

Now, to be clear, government played a role in Baltimore too.

The city and state committed billions to reducing vacancy, nonprofits were heavily involved, crime fell, and developers began rehabilitating entire blocks instead of isolated houses.

All of that helped.

But none of it changes the basic economic reality.

The government can subsidize a project.

It can help assemble properties.

It can spend money improving a neighborhood.

But it cannot sustainably make people spend $175,000 producing something buyers only value at $140,000.

Eventually, the economics have to work.

And once they did, private capital had a reason to pour in.

Free markets do not magically remove every shortage or make every problem painless.

What they do is something more practical:

They Create Incentives for People to Search for Solutions

And the bigger the problem becomes, the more valuable a successful solution can be.

I think there is a lesson here for investors too.

We can look at the stock market the same way Chris Waldron looked at Baltimore.

I don’t need today’s market to become calmer or more rational.

I need to understand what opportunities all this craziness is creating.

Right now, parts of the stock market are pretty wild.

We’ve seen investors pile into AI chips…power…memory…

There is always another theme everybody suddenly decides they have to own.

And every time this happens, people convince themselves they need to chase whatever is going vertical or risk missing the next 10X stock.

You don’t need to play that game.

Because just like America’s housing distortions created opportunities in places like Baltimore…

Today’s market craziness is creating some overlooked opportunities of its own…

Opportunities we can use to generate cash flow while still going after big returns.

That’s exactly what I’m going to show you in my LIVE Tactical Cashflow Masterclass, happening tomorrow Thursday, August 20 at 7:00 P.M. ET.

I’ll show you:

• Why traditional income strategies may struggle to keep pace with today’s rising cost of living
  
• The secret to turning today’s crazy market swings into an additional stream of portfolio income (In historical tests, this approach could have generated cumulative cashflow-only yields like 144% in 2 years… 130% in 16 months… and even 226% in 2 years.)
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• And a unique strategy designed to pursue both higher total returns and recurring cashflow from a single stock (With historical total returns as high as 764% over 2 years – and in one 18-month test, over 10X the return of traditional buy-and-hold.)