To Really Score Deals on Travel, Go Elsewhere

Do you follow the herd or do you make your own decisions?

Don’t be so sure of your answer. We’re all influenced by something, be it an ad we forgot about, a story we read, or a friend’s photos we saw. The key is to decide based on what you want to do and can do, not on what you think someone else wants you to do. And above all, you have to avoid the herd mentality.

If  you regularly invest like a contrarian, you made out like a bandit the past few weeks buying great stocks on the cheap. A day trader could take the next few months off after that wild ride.

If you’re buying gold in some form right now because everyone—from your taxi driver to your uncle—is talking about how gold is the only safe investment, you’re about to get sucker punched. Gold has now decidedly topped the level, adjusted for inflation, that it was in the 1980s. Meanwhile, if you loaded up the truck with stocks then, or when the sky was falling in 2008, August has been but a blip.

The same is true for travel, where going with the flow can really cost you a bundle.

A recent survey showed, as most of these surveys do, that Americans’ dream vacation destinations (if money were no object) are mostly in Europe, with Italy being tops. This is no surprise to anyone subscribing to a major travel magazine as Italy is on their covers multiple times per year. The other places you see a lot in these magazines are also high on the list: England, Ireland, France, Greece, Spain, Australia, yada yada yada.

I start yawning just looking at that list because it’s so predictable. A feedback loop, a self-fulfilling prophecy, a tail wagging a dog, and a mountain of travel cliches.

If you’re planning a summer backpacking trip to Western Europe or Australia, be advised that in no way whatsoever will you find more than a fleeting bargain unless you stay with friends or spend the whole time mooching in another manner. Every day of your travels will be spent trying to keep money from flying out of your pockets at an alarming rate. Because you are joining the herds, conforming to the idea of what must be done on your summer vacation, you will pay top dollar.

A few times a year, I’ll get an earnest e-mail from a relative or a friend of a friend asking the wrong question. “I’m trying to find a good deal for two weeks in Europe in July. Can you help? You’re a travel writer, right?”

The answer to the second question is yes. The first?  “Sorry, but no, I can’t help.”

The original title of this book I wrote a few years ago was supposed to be The Contrarian Traveler. The publisher asked for a title change because the distributor didn’t like it. “It sounds too negative.” Well, call me Mr. Grumpy, but in investing, buying real estate, or travel, the people who score the best deals are the ones who watch the masses and do the opposite. The real contrarians. There’s simply no way to score dramatic bargains if you’re doing what zillions of other people are also doing. (That’s also why an iPhone costs 5 times more than my more powerful Android phone. But that’s another post.)

I’m not saying you have to go to Tripoli next summer instead of Tuscany, but you can easily cut your travel budget in half by just going where the masses are not going. Get this book for 21 ideas to get you started.

If you go where everyone else is going, when everyone else is going, then you’re going to pay what everyone else is paying, with a little variance here and there. Sure there are luxury budgets and backpacker budgets, organized tours and independent travelers, but you’re still locked into the funnel. Bust out of there and be free.

Comments
  1. Jim Carenza

    Flights seems expensive no matter where I want to go or when…may be due to high gas prices. Are you expecting on “air fare war” any time soon?

    • tim

      Fares are impacted by fuel prices more than anything. Unless the price of that drops—doubtful given the upheaval in many of those countries—you need to keep a close eye out for sales. I’ve bought some cheap tickets lately, but I’ve monitored it a while to know when the price was right. Other flights I’ve had to suck it up and pay, or use mileage. Flights are still cheaper than they were 20 years ago though in inflation adjusted terms. We just got spoiled for a while.

  2. doug

    actually gold has an inflation adjusted peak of $2,300. this means that when gold reached a high of around $800 in 1980 it was equal to $2,300 in today’s dollars. Buying physical gold will save your purchasing power as the value of the dollar keeps going down.

    Gold and silver prices are just getting started and the mining stocks are where fortunes will be made in the next few years.

    • tim

      So if you bought gold in 1980, you still haven’t broken even. Look at the chart for stocks over that period in comparison—U.S. or international.

      Gold is looking a lot like internet stocks in 1999. Bubble time.

  3. doug

    everything has a cycle. in the past 10 years gold has increased 675% and the DJIA has gone up 15%.

    The price of gold and silver is not really going up. what you are seeing is the value of the dollar going down. Inflation! its making things more expensive including gold and silver. People around the world are buying gold and silver to protect themselves from currency devaluation.

    • tim

      Doug, that’s true to some extent, but my point is that if you get in and out when the masses are getting in and out, you are going to lose every time. If you bought gold ten years ago, a great investment. 30 years ago OR last week, a terrible investment—you’re buying at or close to the peak.

      Buying stocks ten years ago was not as bad as you make it look as the Dow is up 37% from then, not 15%. (It dipped below 8,000 in September of 2001 and we’re over 11,000 right now). Buying stocks two years ago, when everyone was getting out, was even better: the Dow spent much of two months straight under 7,000. Follow the herd though and you’ll get trampled. The herd is buying gold right now at almost $2,000 per ounce. It’s going to get ugly for them down the line. Will it take another 30 years for them to make their investment back this time? I don’t know, but I don’t like the odds. I’ve seen this movie before and it doesn’t have a happy ending.

  4. doug

    Your philosophy is right on about buying before the masses wake up and then selling as they are buying. As an investor, that is what i do. The point that i would like to make to you though is that i don’t think gold is in a bubble yet.

    I watched the dot com and real estate bubbles very carefully. It was almost like a fever that people had caught and everyone was going to make money beyond reason just for the simple fact that they were going up up up.

    Everyone was talking about hot tech stock tips in 2001 or flipping real estate several years later and how much money they made.

    Well, how many people recently have given you the name of a hot gold stock to buy? How many of your freinds and family are invested into gold or silver?

    Do you hear people talking about different gold funds and which is the best to buy at your gym or at a party or anywhere? I don’t. Because gold and silver are just beginning to get on most peoples radar. They have not jumped in yet. The manic phase has not begun yet.

    Alot of the gold and silver mining stocks are selling for less than they did in 2007 when gold was less than $1,000 an ounce!!

    Alot of them have a p/e ratio under 20. That does not sound like a bubble to me. Even if the mainstream media would have people believe otherwise.

    Here is what James Turk has to say..
    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/9/5_Turk_-_Historic_Event_as_Gold_Surges_%26_Stock_Markets_Tumble.html

    • tim

      From Forbes, August 28:

      “This week GLD, a gold ETF, surpassed SPY, an ETF tracking the S&P 500, to become the largest Exchange Traded Fund. Gold prices also set a new all-time high. This should ring the bubble klaxon!

      Gold is an useless asset. It does not produce earnings, it does not pay dividends or interest, and it has few industrial uses. The only things it does well is look pretty. So why is everybody buying it instead of stocks, bonds, rental properties, or anything else that does produce an income stream? There are two possible answers: Gold is undervalued even at its current price. Or herding behavior causes people to buy into a bubble.”

      I’ll go with the second answer. My clueless relatives are talking about buying it for the first time, so are taxi drivers and bartenders. Near my house, four retail shops have huge “We Buy Gold!” signs and they’re all new shopfronts. There are “Now’s the time to buy gold” ads all over many TV stations that never talk about investing. A sure sign of herd mentality—and a bubble.

  5. doug

    Hi Tim,

    So your seeing the shops with “we buy gold!” signs around your house? I see the same signs around my house. In my opinion, they are not signs of a bubble.

    You just have to look at the last gold bubble to know what signs to watch for… they are signs that say “we sell gold” and you will be able to tell where these stores are during a bubble because there will be a line of people out the door, down the street and around the corner… all wanting to buy.

    This is what happened 1980. People were paying others for their place in line just so they could get in sooner to buy before the price went up more. Any stocks that had the word gold in their name automatically went up… even if they did not have anything to do with mining or metals, but because they had the word “gold” in them.

    Remember the dot com bubble? All a new company had to do was put an e- in front of their name and people were falling all over themselves to buy the ipo.

    Remember the Real estate bubble when people would wait over night in line just to get the chance to buy into a new real estate developement? These are bubbles.

    I have not yet seen that fervor in gold. I have not seen anything on the nightly news like an anouncement for an ipo of the latest hot mining company with wall street all abuzz…speculating on what the price will be and then seeing investors throwing in their money without thinking, just trying to get in.

    I would not go listening to what forbes magazine has to say either. He only gives two answers as to why people are buying gold and neither one of them is the right answer in my opinion.

    The true purpose of gold is to be a currency just as the dollar pretends to be. gold has been a currency for thousands of years. The dollar used to be “as good as gold” around the world because it was backed by gold. That is no longer true. The dollar is not backed by anything. That is why the dollar will be eventually worth zero.

    Gold cannot be printed. It is rare and has to be mined from the earth at great cost. This is why it is the ultimate currency. Every paper currency of every nation in the history of the earth has failed, printed into oblivion. What a farce that we as a people have been led to believe that pieces of paper, printed in mass, with pretty pictures on them are worth something!

    Say in 1930 your grandpa buried a $20 gold coin and a $20 bill. Both of them were worth $20 at the time. Which one would you like to have today? The $20 bill is worth $20. The $20 gold coin has over $1,800 of gold in it. So you can see how much the dollar has lost its value.

    People around the world are waking up. Alot of them used to keep their savings in dollars because it was stable and held value better than their own currency. That is no longer true. You know from traveling that the dollar is not so popular anymore. Why hold onto something that is going down in value?

    Gold will be the true victor.

    • tim

      To give some logic to your argument, if my grandpa had bought GE with that $20 instead of burying a piece of paper, he’d own entire neighborhoods by now. Gold is a shiny commodity. There will be no lines outside the 20 storefronts within five miles of my house because the world is awash in the stuff. It’s artificially pumped up, a crappy investment now as it has always been over time. So has putting any first-world currency in a savings account. Money is just money if you don’t invest it.

      Let’s talk again in a year or two after the bubble bursts, as it inevitably will.

  6. doug

    You have things turned upside down. The Gold price has been artificially suppressed, not pumped up as you say. We are so far apart in our views of reality. I can agree with you though that we should talk in a year or two. Time will prove our guesses right or wrong.

    My best advice to anybody is to stay away from the mainstream financial media.
    They are in place to make money for the people and institutions that own them.

    They are taking your money, not making it

  7. Santiago

    You can come to South America, there are still some cheap countries. Like Bolivia or Ecuador, where a dollar worth’s a lot. Other countries like Brasil for example, are almost expensive like Europe.

  8. grupopedia

    Groupon travel is a great place to find excellent travel deal

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