Investing for stable, steady growth

When people are interested in improving their investment results, what do they want more of? Typically, they want more of two things: stability and total gains.

Stability means that the total value or account balance will consistently rise with only very small declines. (That is also known as “wealth preservation” and the most common strategy for preserving wealth is diversifying across the most stable trends and markets.)

Total gains of course means that whenever you choose to withdraw money from your investment accounts, there is a lot more money there then what you put in. So, in summary, we value gains that are not just consistent, but also large.

Now, for some added perspective, let’s look quickly at the best-performing group of stocks in the US stock market last decade: the HUI sector. Note that most investors and even investing professionals have never heard of that group of stocks (because most people including financial professionals have not been focusing on the best results that are easily available to them- they either try too hard or not hard enough).

The above chart shows the performance of the stock prices of that group of 15 US companies. From a low of $35 in late 2000, the price of the HUI sector increased tenfold by 2006, gaining over 1600% by 2010.

Did your stock market investments grow that much last decade? Most investors (including in the US) experienced little or no gains overall in their stock investments last decade. In the case of US investors who had been heavily concentrated in US high tech companies such as are found on the US NASDAQ stock exchange, typical returns for the decade were losses of 50% or more. (See chart below.)

In other words, rather than witnessing consistent gains, many investors experienced continuing losses. Still, many of them continued to stay invested in losing methods and strategies for most or even all of the decade.

In fact, you may even be one of them. Whether or not you experienced disappointing investment results last decade, you may be quite interested in producing investment results that are both more stable and more profitable.

However, you may not know how to produce the results that you would value enough to alter your investing method. That is why you are reading this, right?

Before I say more about a simple strategy to consistently produce large gains (while maintaining a stable balance), let’s combine the two charts above to make something very clear. Here are the two charts shown together:

While the large gains of HUI (the tan line) are obviously far better than the large losses of the NASDAQ composite index (“COMP”), we can notice periods when HUI did quite well and periods where it did not gain. In the years 2000, 2004, & 2008, HUI lost value for the year (especially in 2008).

Why do I emphasize this? Because even when investing in 15 companies (which might seem like a lot more diversification than investing in only 1 or 2), there can still be long periods of no gain or even large losses (just like when investing in a bundle of 100 or more stocks like in the US NASDAQ).

Diversification itself does not provide for stability or wealth preservation. The specific method of diversification must fit the goals of the investor, or else that method should be discarded or at least revised.

So, if you want a stable balance or market value (with only very small declines), that requires WISE diversification. Further, that may even mean avoiding illiquid markets like real estate (markets that can be very hard to quickly sell, often taking weeks or even months to exit from the investment).

Wise diversification means having a group of investments that are all consistently increasing in value. If one or two of them briefly fall a few percent or even more than that, that still will not effect the total balance much. Why? because the majority of the investments are still making consistent gains!

Imagine a real estate investor who loses even 10% or 15% in a particular year. If that investor is also investing much more net worth in other investments that are all making large gains (like the best stocks, the best commodities, and the best currencies), then even losses as large as 10% in a year in one investment will not produce an overall net loss. Why? Because that investor was wise enough to diversify in ways that profited from consistent trends in other markets besides real estate.

Now, let’s review my personal background a bit. Then I will reveal the other issue besides diversification that is essential for vast improvements in your investment results. Let’s read a paragraph from an investment commentary published in 2003 on March 3rd:

“Yes, we can profit from the collapse of the credit bubble and the subsequent stock market divestment. However, real estate has not yet joined in a decline of prices fed by selling (and foreclosing). Unless you have a very specific reason to believe that real estate will outperform all other investments for several years, you may deem this prime time to liquidate investment property (for use in more lucrative markets).”

I wrote that. Here is the link to the full article: 
http://www.gold-eagle.com/editorials_03/hunn030303.html
 .

Is it interesting to you that in early 2003, I was referencing that real estate markets would eventually decline in price because of an increase in foreclosures? Is it intriguing to you that I was referencing a collapse of the credit bubble (which means a decrease in the total amount of borrowing and lending, like for mortgages)?

I referenced it being “prime time” to liquidate (sell) property. I emphasized that other markets might be “more lucrative” (more profitable).

What investment markets were I emphasizing in early 2003 as more lucrative than real estate? If you click the link above and scroll down to the end of the article, here is the last image you would see:

That is a chart of the performance of the HUI sector in the two years prior to March 2003. That sector, which went on to gain over 1600% last decade, is the one that most investors ignored in favor of things like real estate and stocks from the US NASDAQ (both of which had their worst decades in a very long time).

I strongly recommended against real estate. I emphasized the gains of over 200% in the prior two years in HUI (which I knew would accelerate if commodity prices continued to outperform most stocks).

What else did I recommend? I noted the multi-year rallies in commodities like Gold and Oil. I also emphasized why I expected most US stocks to do less well than commodities.

“easy credit fed the stock market hysteria…. Many even rushed to refinance homes again (trading equity for cash) to create the final wave of the 90s stock mania.”

Of course, that wave of real estate borrowing did not end in 2003. As it continued, many US stocks eventually recovered from their declines- but not all.

Except briefly before crashing in 2007, the high tech sector of the US NASDAQ exchange was down more than 50% from it’s 2000 peak almost the entire time last decade. The housing sector plummeted in 2005 (“HGX”) and the financial sector (“XLF”) plunged in 2007 (shown below).

So, that is a little background on why you might be especially interested in what I personally can tell you about extraordinary investment strategies. In addition to diversifying, the other simple key to consistent profits is to analyze trends and exit from trends as soon as they weaken.

As an example, let’s look at HUI in 2003. First, here is the “raw” chart:

Here I add one trendline:

 

Here I add another:

The two lines are obviously parallel, right? That is called a trendchannel. They form very frequently in many price charts, including for bundles of stocks like the HUI sector of 15 US companies.

To a trend analyst, I would notice that when HUI rebounded in early October, that rebound was at a parallel slope (angle) to the three weekly highs from mid-August to mid-September (the green line). So, I would buy HUI and hold it as long as that established uptrend continued.

I would buy between 190 and 200 in early October, then hold and watch very closely in the first week of November for a possible exit at 200. That was the second test of the lower (red) trendline.

In late November, I would exit between 245 & 255 when HUI “broke” out of the trendchannel. I might sell “conservatively” when HUI reached the green line (depending on what other opportunities I noticed in other markets). Or I might hold on while HUI surged up above the trendchannel briefly and only exited when HUI penetrated back in to the trendchannel.

In any case, that would be a gain of over 20% in several weeks. That is better than most people do in a year. Are you interested in results like that?

Then, in December, when HUI reached the lower trendline again, I would be looking for buying in again- but ready to exit with a small gain or even small loss if prices did not continue the upward trend. Here is the same trendchannel plus the next two years of HUI:

Depending on what I saw in other markets, I might not be interested in HUI again until mid-2005 when HUI fell toward 160 (a prior low) or even in November 2005 when it broke above 250 (the brown line).

Maybe you understand the trend analysis referenced above. I picked a relatively simple example, but the point is that there are lots of trends happening all the time. If I find a few of them and trade them conservatively, I will keep my account balance growing steadily. Any particular day or week, there could be a small loss in one or two of the positions, but with several positions all in clear uptrends, the account balance would consistently increase with occasional slight declines (triggering “trailing stop orders” to protect the prior gains).

Why don’t more investors do this? Because it is unfamiliar to them- even complicated and stressful. The research of comparing several markets can be time-consuming and tedious.

Why don’t more professionals offer this? Most investment professionals earn commissions from selling investments, not a percentage of any gains. They have no vested interest (profit-sharing), so their motivation to perform well is minimal if any. They do not suffer any great loss when their clients lose money. They are salespeople, not business partners.

What is different about me? I am open to offering you access to being a partner in my trading business. I am so confident in my results that I only ask for a share of the profits that I will consistently generate for you. Contact me if you are interested in partnering with me so that you can watch your investment account balances consistently multiply.

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“Who should I blame next for the results of my actions?” – The Devil

JR: wow- some investments that were $3 the other day (earlier this week) and then yesterday ranged from $7 to $11… are $35 right now. BUT, I sold them yesterday at $10. Oh well, I take a conservative gain sometimes and miss an even bigger one.

SB: Holy smokes! And of course you are so zen about it. I guess you are the perfect person to be playing the market.

• 

JR:

• Trading (at least short-term trading) is a rather simple activity in terms of emotions. There is curiosity, excitement, fear, disappointment, and gratitude. All of those will come up. Short-term traders are speculating and they know it.

  It is the people who do not know that they are speculating that end up blaming a US President for their foreclosure (or glorifying a President for their 401k gains). Those folks are gambling and seem not to know it, so they do very little research and are very shocked when they suddenly learn that their $200,000 investment of borrowed money is an extremely high-risk speculation. Naturally, realtors and mortgage brokers tend not to emphasize the immense risk of foreclosure and bankruptcy that goes with gambling hundreds of thousands of dollars of borrowed money.

  

  Official photographic portrait of US President Barack Obama (born 4 August 1961; assumed office 20 January 2009) (Photo credit: Wikipedia)
• So, unlike with credit cards where people understand that they are promising to pay back the borrowed money, real estate speculators tend to presume that the real estate itself will cover the debt (which is quite ridiculous really- like think about buying a car on borrowed money and then expecting the car NOT to depreciate- how crazy is that- of course assets tend to depreciate as new construction methods make old buildings… seem just plain “old-fashioned” – and of course there will be significant upkeep expenses, especially on real estate!).
• But besides all of those facts which even a person investing cash in real estate will recognize, keep in mind that a $200,000 mortgage will typically cost more than $300,000 to pay back. Unless there is a huge appreciation in the resale value of the real estate (which most speculators simply assume will happen across 15 or 20 years), borrowing may be much more expensive than renting, like in the case of people who bought real estate in Japan in 1989 at the peak of the boom. 24 years later, the real estate market is still way down. Most excited speculators simply do not research the reality of markets because they are so excited (greedy?).
• Consider that if you had $200,000 cash, you might be quite skeptical to spend it all on real estate (rather than diversify across a few investments). However, if you did not have hardly any cash, but could get a $200,000 loan, you might be much less skeptical about spending $200,00 of borrowed money. However, that is the “logic” of a hysterical mania. People “should” be more conservative with borrowed money. In fact, during speculative manias, people tend to be so excited that they think of gambling with borrowed money as safer than their own money. Why? Because if someone will lend them so much money to purchase real estate, people presume that indicates that real estate is safer than stocks or lottery tickets or whatever. However, look at Japan’s last few decades! (picture shown includes 1989-2011)
• 
• So, if I lend you money to invest in stocks or lottery tickets or real estate, that does nothing to change the inherit risk of those markets. However, if huge groups of people all lend money to people to invest in a particular market (like real estate), that tends to dramatically inflate prices in that market, making it extremely expensive for renters and so on. In 2003, when I started writing about the coming real estate collapse (which began in the US a few years later, but is far from over), I was already clear about basic principles like I have just mentioned here. Further, even though there has been a dramatic decline (over 50% in real estate prices here in most of Arizona), most people are still quite illiterate when it comes to the risk involved in speculating on a market like real estate which is inflated by huge amounts of lending and can quickly and sharply deflate, just like happened in Japan in the 90s and last decade, or in the US in the 1930s.
• As another analogy, does it change the long-term resale value of car to buy it in cash or buy it on borrowed money? Not at all, right? However, many people act more confident simply because they are speculating with borrowed money rather than cash when it comes to real estate. In fact, they are typically acting only on excitement, not as disciplined speculators. So, when their high-risk choices are exposed as high-risk choices, they tend to react with denial and blame and so on. That is kind of like eating a horrible diet and then complaining that diabetes and infertility and so on are arising.
• Does it change the biochemical results if the food is provided for free, bought with cash, or bought with borrowed money that still needs to be repaid? Not at all, right?
  If people want good health, it can be important to research the results of various diets. Those who blindly rely on the FDA get the natural results of their blind reliance.

  

  English: Logo of the . (Photo credit: Wikipedia)

  If people want wealth and security, it can be important to research the actual results of various investment strategies. Most people do not really have any strategy at all. They are just following the herd.

  When everyone else does well, so will the herd followers. When everyone else is facing bankruptcy, so will the herd followers. When everyone else is complaining about how Obama is to blame for high gas prices, so will they.

  However, high gas prices in the US tend to correspond to high prices elsewhere (Europe, Japan, etc). Also, gasoline prices may $4 in California while they are $3 in South Carolina. Is Obama also to blame for that?

  Now, to continue the analogy, let’s say that people want a politician to change things to lower gas prices and raise housing prices (like because they are already $50,000 upside down in a home that they cannot afford to sell). They are in an extreme of desperation.
• To me, that is kind of like eating a crappy diet, getting sick, and then wanting to keep eating the same diet and having the President change biochemistry so that the same diet will produce different results. That is deluded, hysterical, and… very common in regard to how people think about investments.
• Their strategy is follow the herd blindly, then complain about a politician when things do not go well for them. That is the same strategy as blindly following the advice of doctors who claim not to understand cancer well enough to cure it. If they do not understand basic physiology and say so openly, then what credibility do they have to give advice? Why exactly should I do the thing that I know will cause all of my hair to fall out? Why shouldn’t I research long-established methods for not only preventing but remedying cancer? Well, one factor is that special interest groups like the FDA have taken extensive measures to censor such information while investing huge amounts of money in to indoctrination programs about how cancer is allegedly incurable.

• But not all of the information is censored or targeted for prosecution. Anthropological research that clearly shows what cultures (and what diets) produce zero incidence of cancer have been around for at least 80 years. But many modern people operate in a state of ongoing low-level panic. When a holy doctor from the royal priesthood of the FDA says that cancer is incurable, people just accept that without question typically. They think that something is a scientific fact just because the FDA said so!
• (John Hopkins University recently admitted that it had been wrong for the last few decades about something, and many people seem to believe that because they admitted being wrong, now they suddenly have more credibility when they publish something. Well, consider that they never did have much credibility and still do not! Results establish credibility. If you want a cancer cure, go to where there is either no incidence of cancer among large groups of people and copy their behaviors or else go to where there are long lists of people who have had totally recoveries from cancer and copy their behaviors. That is only logical. Or, keep paying attention to what the jokers at John Hopkins University are saying today that they will be retracting in a decade.)
  So, when a diagnosis of cancer is made, most people just react with terror. They do not think “why should I accept what this person who claims ignorance about how to cure cancer is saying?” (Actually,  recently more and more people do think with a healthy skepticism about the religious fanaticism of the superstitious worshipers of “incurability.”)

  Notice that most people do not think “why are cancer rates rocketing across recent decades?” They do not look for books from the 1930s on why cancer was so rare for most of human history, right? Further, if people came knocking on their front and offered them such books for free, would they even read them in that case? Many might not. Many may not think of personal responsibility as a priority.
• Likewise, when economies shift, do masses of people chase down those who explicitly predicted the shifts? No, they keep tuning in to the same mass media outlets who failed to give advance warning. Why? Maybe these mass media outlets (programming) which are by now established to have no credibility or competence will suddenly have competence and credibility.
• Again, it is a low-level panic that then resolves in to terror and desperation with herds of people clinging to the familiar. That is why the opportunity for the few who are alert is immense. The masses are still relying on TV shows for instructions on investing, relying on Obama to secure your retirement through social security, and so on.

Panic attack (Photo credit: Wikipedia)

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realism about investment risk and opportunity

Investment Conference (Photo credit: Salmaan Taseer)

I have an update on investing. First, keep in mind that I published predictions in 2004 of the rising of fuel prices in the US and elsewhere, which I said (in 2004) would be the primary factor that would break the trend of manic speculation in real estate borrowing (and prices)- which began by mid-2005 in “energy-sensitive” places like Phoenix and Las Vegas- and that the fuel price spike and real estate crash also would bring down prices of US financial stocks in particular (and stock market speculation in general)- which happened in 2007. Did you get all that? Now… here is another update.

US stock market prices are at a critical level of risk (and opportunity). About an hour ago, I bought 9 positions at $9 that I sold a moment ago at $19 (just over a 100% gain). That was just a small portion of my account that I was trading “for fun” (expecting a nice gain, but not especially concerned about the results of that individual trade).

Dangerous Risk Adrenaline Suicide by Fear of Falling (Photo credit: epSos.de)

English: Phillippine stock market board (Photo credit: Wikipedia)

The big opportunity (and risk) is in the immediate future. This week, I made around 8%-10% gains overall (and I have not done the math yet and probably won’t bother). My gains in the last 4 days alone are better than I expect most investors will do this year (because I expect most investors to be more disappointed in 2013 by the results of their choices than in any prior year in any of our lives).

Most of my investments right now are in a short-term investing fund called SPXS, which I bought in to today at $13.64. I expect that at some point tomorrow the value of those positions will rise so high that I will have at least doubled the gains I already made in the previous four days, but I expect to keep holding it for many days or even a few weeks.

That fund is the kind of fund that even relatively unsophisticated investors can access (like in regular IRAs and even some 401Ks). Similar funds that are even more accessible include RYURX and PSSAX. They are shown in the attached image, producing gains of over 40% in less than 2 months (in late 2008) in the same period of time that US stocks plummeted over 30% (and gold mining stocks were down by over 50%).

Note that “any competent forecaster” forecast the US stock market crash (and the real estate market crash). In other words, anyone who did not forecast what actually later happened is not competent- especially if they in fact forecast something else.

So, I say that not only as someone who published forecasts of that, but also as someone who read many other authors who, looking at the same data and using the same correlations and logic, recognized the same risks and opportunities. Most people not only do not know how to assess the risk of real estate market and stock market crashes, but apparently do not have any commitment to produce “above average” results, instead settling for having average results and then complaining along with most everyone else when the issues that people like me write about in 2004 or 2003 come to public attention in 2008 (but then only to be dismissed again in a new wave of extreme complacency/trance).

Fox News Channel (Photo credit: Wikipedia)

People who are interested in how to adapt to economic realities, to both re-assess and reduce any risk as well as to benefit from easily recognizable shifts in trend are welcome to contact me privately. Note that just because most people only recognized issues like rising gasoline prices as a major economic issue in 2007 (not in 2004 like I did), that just shows a lack of commitment on their part. It was not hard to recognize the issue years before it made headlines. I reported on those issues years before the mainstream average investors expressed any interest in re-assessing the safety and prudence of their investment choices (or lack of safety and prudence).

Public Broadcasting Service (Photo credit: Wikipedia)

Those who are waiting on Fox news and PBS to report on economics are like stock market investors in AIG who only found that AIG was in serious financial trouble AFTER they filed for bankruptcy. Note that the day before they filed for bankruptcy, their finances were just as bad as the day they filed and it was reported in the media. Most investors simply lacked the commitment required to assess the realistic risks of their investment alternatives. They just bought the things that advertisers and commission-earning salespeople (realtors, insurance sales people, etc) made the most profit by selling. Indeed, the financial balance sheet of AIG actually IMPROVED when they invoked the protections available through bankruptcy courts.

English: The top portion of the American International Group headquarters building in New York City at dusk; see a similar image of the building sunlit. (Photo credit: Wikipedia)

Again, most investors were shocked in 2007 and 2008 by the rise of fuel prices (which I detailed in 2004), the fall of real estate prices (which I referenced as far back as early 2003), as well as declines in stock markets. The naivete and complacency of the “average investor” is what makes it so incredibly easy for “above average investors” to make 40% in under 2 months (at the expense of less committed investors, since markets are all about the redistribution of unearned gains, right?).

“Far above average” investors can make much more than 40% in a couple of good months. For those who would like for me to document the easy triple digit gains that most people missed in 2008 as they instead suffered huge losses by investing with little or no commitment to realistic assessments of risk (and opportunity), let me know.

Lehman Brothers Rockefeller centre (Photo credit: Wikipedia)

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1 million dollar lesson: above-average results from above-average methods

1 million dollar lesson:

simple principles that ex-millionaires now wish they had followed

1) whenever surprised, be willing to get clear and re-prioritize boldly.

2) always conservatively protect your finances.

3) be willing to outperform any average results (someone has to do it, so how about you?) and be willing to earn those above-average results with above-average methods and above-average prudence.

Consider that, if neglecting to follow a certain principle results in the loss of a million dollars, then following that principle would have been worth a million dollars. Further, if folllowing a certain principle produces a gain of a million dollars, then following that certain principle would also be worth a million dollars. If a certain principle can both save you a million dollars plus earn an extra million or two, following that certain principle would be better than one that is “only” worth a million dollars. (Then again, one has to start somewhere, right?)

I first published an alert about my investment market analysis in early 2003. By mid-2005, I had given several public talks and also specified several new developments that may have surprised many others, but signaled to me the first stages of the fulfillment of my forecasts. Those 3 pieces of new information were (1) new homes sales data for the US had notably declined, which was rather unusual, (2) the housing sector of the US stock market had also declined (HGX- shown below), and (3) the overall real estate markets in previously leading regional markets, such as Phoenix Arizona and Las Vegas, Nevada, had already turned down as well.

So, by 2006, I first talked to some millionaires about my analysis. I warned them about what I considered to be extremely high risk in their Scottsdale, Arizona high-end real estate. I also warned them about their extreme confidence in the US stock market.

Together, all the people who neglected to follow the course of action indicated by my analysis soon lost millions of dollars of net worth, especially in real estate, but also in US stock market investments. Those people also neglected to access the opportunities to multiply their millions several times over. Let’s say, that for all of the people I talked with but who did not follow what was indicated by my analysis, a difference of about $10 million could have been made, mostly from possible gains that were not accessed.

Frankly, when I consider that estimate, the number does not mean much to me. I had information and a contact network that could have avoided losses of millions of dollars as well as compounded gains of several million more. However, I and those in that contact network failed to produce that benefit of (approximately) $10 million. We simply did other things instead.

Since $10 million is a number that does not mean much to me, let’s do some simple math. Let’s say that there were exactly 100 people in my network of contacts (which is close enough) that were exposed to at least the basic conclusions of my analysis. If there was an average benefit of $100,000 for 100 people, that would be $10 million. Let’s consider what that $100,000 would be worth today.

$100,000 today could buy and furnish a small, modest, decent house in certain neighborhoods of Phoenix Arizona (free and clear), plus a brand new economy car (free and clear), and still have about $50,000 left (seriously) which could cover a year of tuition and expenses at one of those ridiculously expensive colleges. I’m not saying that I would use $100,000 in that way, but that gives a lot more practical sense of what $10 million would be worth.

100 people could have had an extra $100,000 and of course the 100 people would use it in various ways. Some of them would likely continue to invest most of it according to the same investment strategies that had produced those gains.

Now I did not say they would use the same investment methods that had produced those gains, but the same strategies. Unfortunately for the ex-millionaires from Scottsdale, they did not really have an investment strategy at all. They merely had some success in a certain investing method (real estate), though they may have diversified marginally into the mainstream US stock market (which, depending on whther they invested in the financial sector stocks, housing sector stocks, or something else, may or may not have produced net gains or losses since 2006). However, they really did not have anything approaching a strategy. They might have done the same things ten years ago or ten years from now. They had more than one method (if only barely), but perhaps no real strategy at all.

Here is a key thing about having an investment strategy: be willing to earn results that are above average. Someone starting with $100,000 to invest, if they are getting average returns, will eventually have 10 times as much as someone with $10,000 who is getting average returns. No matter how much one starts with, average returns are still average returns.

That is, average returns could be a 5 year gain of 100% (lke in US stocks from late 2002 to late 2007) or an 18 month decline of 50% (like in US stocks from late 2007 to early 2009) , or both combined, a 6.5 year period of no net gain, more or less (from late 2002 to early 2009). Average returns can be gains or losses or neither. However, what average returns can never be are above average.

The key to making above average returns is to consistently invest in the specific  investment methods that are currently producing above average gains. That means changing investment methods occasionally or even frequently (or at least entering, exiting, and re-entering a certain investment market strategically based on specific reliable indicators).

Strategic investing always involves changing positions and always involves doing so based on some specific signals, preferably some information that is identifiable in advance as a reliable indicator. What makes a certain indicator into a reliable indicator? That’s simple enough: correlations with a practically-useful chronological gap. If a certain indicator has manifested a particular indication 10 times in a certain time period (the longer, the better) and every single time that indication has been made, some particular development has always (all 10 times) followed, that is what I would call reliable. It does NOT matter what happened all the rest of the time, but only when a particular indication was made, that identifies a particular indicator as reliable.

Now, would you like to know some of the relaible indicators that could have saved those millionaires from being ex-millionaires today? By the way, those are the same reliable indicators by which someone with only $100,000 (or even less) in 2006 could be a millionaire by now.

You might even want to know which of those reliable indicators are currently indicating certain investment methods as the ones relevant to use now to reliably produce earnings that are millions of dollars above average. So, how much would that be worth to you? Well, yeah, that is actually a rather silly question, isn’t it?

First published on: Dec 23, 2009

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secrets of humble partnering- the key to consistent, easy investment gains

a simple, bold assertion: partnering with markets is the key to consistent, easy investment gains

Imagine two groups of people: one group keeps investing in an old, familiar industry and the other group invests in a new technology. Will their investment results be exactly the same or somewhat different?

For instance, will bicycle investors perform the same a automobile industry investors? Will telegraph investors perform the same as those who invest in telephone technology or even in the radio industry?

Recall the children’s story of “The Three Little Pigs.” You were probably tucked in a warm bed looking at pictures of the different results of investing in a straw hut, a wooden shack, or even a brick mansion. Some structures collapsed from a blowing wind while only one provided secure shelter from a hungry wolf.

So, different methods clearly produce different results, right? When hurricanes and tornadoes arrive, will a house built on the sand provide the same results as a house built on the rock?

You may be wondering whether childrens’ stories and proverbs from scripture could have anything to teach us about our investment results recently and in the future. Consider that in just the next couple of minutes, we might learn something very valuable from briefly exploring the principle that different methods produce different results.

Most concisely, here is my fundamental assertion about accessing easy gains; for those who partner with markets, consistent investment gains are easy. Also, for all the rest, investing that is risky but is not recognized as risky is what provides the source of those easy gains to those who partner with markets, because so many blindly under-estimate risks that a few notice long before the mobs learn about those risks, such as from the mass media reporting one statistics that are already a month old or even an entire quarter or year out-of-date. The masses may be unpleasantly surprised because what they had believed to be safe or stable may be suddenly recognized as not currently safe or stable.

Those select few who notice changes early may prudently make practical adjustments that are insightful, brave, and of course not popular… yet. However, once those adjustments get popular, the easy gains of selective investors can be immense.

So, some humbly partner with markets, while others instead simply ignore or even violently resist market realities, discarding the simple truth of market realities and risks in favor of idolizing various ideals and ideologies in which they have been indoctrinated. They may vainly worship the guidance of commercial advertising, or of salespeople earning commissions and bearing the title of “licensed advisor” or “licensed agent,” or of the mass media’s dramatic and confusing analysis developed by only the most politically-correct economists. The masses may as well even complain forever about the unsatisfying guidance they have been following without making any personal adjustments to continuing to follow it!

Those blind speculators following the blind advisors are inevitably surprised when they recognize the reality of their speculative gambling, typically focusing desperately on the latest possible saviors as well as on any convenient excuses and targets of blame to explain how they have been victimized, rather than openly admitting that they have been negligently responsible for producing for themselves the natural results of their high-risk investing. They may as well keep putting all of their hysterical faith in partisan politicians to rescue their favorite investments from the realities of markets and economics.

But couldn’t politicians rescue the bicycle industry from the automobile industry? Could politicians rescue the tent industry from the construction industry? Could politicians rescue the firewood industry from the coal industry or the woodstove industry from the electrical stove industry? Could politicians rescue the telegraph industry from the telephone industry (or from fax machines and email)?

Or, what if we pass a pro-telegraph constitutional amendment or make a treaty with every nation in the world to only use telegraphs? Subsidies and restrictions on competition can certainly influence isolated territories, but eventually, telegraph technology simply may not compete with things like CBs and cell phones.

Politicians simply cannot rescue everyone from the progress of technological innovation. Politicians cannot rescue anyone at all from personal responsibility for diet and exercise. Politicians certainly cannot rescue everyone from the realities of geology (such as the depletion of fossil fuels like oil, coal, and natural gas and the natural consequences of such depletion).

Markets are informal collectives formed by the spontaneous actions of masses of people. Politicians cannot rescue the masses of people from the masses of people and their own actions.

You may have heard that God helps those who help themselves. Consider that God helps those who are committed to partnering.

Those who partner with markets prosper. For those who ignore or even resist the realities of market risks and opportunities (and instead stay withdrawn to read headlines and continue blindly investing in the promises of politicians and insurance companies and so on), such masses are still subject to the risks of a redistribution away from them toward those who have been insightful and brave and adaptive. In other words, different methods produce different results!

To partner with markets to access easy gains, call
407 4 EZ GAINS
(407 439 4246)

[that # is just a voice mail. You can directly reach me at 480 265 5522.]

Published on Dec. 10, 2010

 

http://www.OneEyedKingsWealthClub.com

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a crisis in trust- financial institutions, governments, media, etc

As usual, the video has some extra content.

I began rigorously studying trends in 2002. I have studied trends in prices and trends in the specific behaviors of borrowing, buying, and selling as well as trends in demographics, psychology, and language.

Consider that we are in the midst of an immense shift in what people trust and even in how they trust. Various people may favor trusting some of the following: the bureaucrats of big governments, famous religious leaders, private companies like the commercial media or huge insurance corporations, their elders, their own personal acquaintances, and even their own personal experience and direct comprehension.

Can you think of any people who trust their governments more than ever? Many of them may be desperately hoping that their trust in their governments will be rewarded rather than punished. Consider that in the 20th century alone, there were many catastrophic examples of people desperately hoping that their latest politicians and governments would be more trustworthy than whoever they were replacing.

Other people trust insurance companies more than ever. Again, many of them are depending on (as in dependent on?) the future results of their past investing in the possible stability of the insurance industry (all of which are companies that concentrate huge amounts of risk such as AIG).

Image via Wikipedia

Some people depend primarily on the stock market (and the pension promises of companies like Enron or, again, AIG). Others depend primarily on the real estate market. Many people intentionally diversify, perhaps indicating that they do not especially trust any particular one of their various investing strategies.

Image via Wikipedia

Traditionally, most parents may have trusted primarily in their children to provide for them in their retirement. In recent decades, have parents been investing more or less in their own children? By investing primarily in distant governments and insurance companies, many people have been trusting more and more in other people’s children to provide for them. [Note: by the way, if your own children are doing relatively well, such as the average middle-class family in an industrialized nation, you might also count on the fact that many other people could be expecting your own children to provide for them in their retirements.]

“The worker-to-retiree ratio has plunged from 42:1 in 1940 to 3:1 today.”

Image via Wikipedia

From a 2008 publication printed by Columbia Business School. [This is due to medical advances leading to a much higher percentage of people living to age 65, plus a much longer life expectancy for people who reach age 65, as well as a reduction in the birth rate after the "baby boom."]

Of course, there can be a worsening challenge if growing numbers of retirees are depending on shrinking numbers of people to support them. Eventually, more and more people may begin to ask exactly how many retirees can safely expect to be supported by a single average household? (Note that I did not say the average middle-class household in an industrialized nation, but an actual average household.)

Many people invest only hope, perhaps at the unscrupulous direction of commission-earning salespeople of real estate and annuities and so forth. Are you willing to invest not just hope but trust? Are you willing to share in the responsibility for the results produced? Are you willing to partner with people who focus on consistently producing easy gains and who are willing to stake their own finances on the partnership you can form with them? If so, I invite you to let me know.

Published June 28, 2010

posted as a post on March 3rd, 2012

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Up Next Investments – stocks, bonds, real estate, commodities, currencies

stock market (Photo credit: 401K)

Which investments will go up next?

Stocks? Bonds? Real Estate? Commodities? How about currencies?

Which ones will go up most? Which will go up longest? Which will go up furthest?

Every investor I know is interested in these fundamental questions. Some are more clear than others that these are their fundamental interests as investors- not doing what everyone else has been doing, but investing in what most investors are ABOUT to invest in most- simply because what most investors are about to invest in is the investment that is going up next.

A few service providers have been committed to answering these questions in advance for their network of investors. By providing you advance notice of what investments are going up next, we help your investments be the ones that are going up next. We help you make the investments that are going up next be your investments.

Image via Wikipedia

Below are links to a few of the published forecasts made by our founder in the last several years.. Note that in many of the early publications, the “tone” may seem immature and even contentious. However, all along, the basic long-term analysis has been consistently valuable. Plus, the tone and overall quality of the writing has been developing, so that reading each newer material is not only informative in terms of being lucrative, but also a more enjoyable read.

March 3, 2003: http://www.gold-eagle.com/editorials_03/hunn030303.html
Why are investments diving…
and what can I do about it?
I published a simple explanation of the huge decline in global stock markets of the prior years. I also issued my first warning about coming instability in lending markets and then real estate. I forecast that gold would outperform stocks (which it did), and I featured the HUI sector of the US stock market (which dipped just below 120 in March 2003, then surged up to over 500 by early 2008, a gain of over 300%).

November 11, 2004: http://www.gold-eagle.com/editorials_04/fibonacci110704.html
“Are you affected by the real US deficit: oil?”
Oil was around $50 when this article was published. My warnings focused on a coming rise in gasoline prices, along with oil. The final target for oil (not stated in this article) was $140, which oil exceeded very briefly in the summer of 2008, then fell to the low $30s by late 2008.

September 9, 2005: http://www.financialsense.com/fsu/editorials/2005/0906.html
NAVIGATING THE NEW ECONOMY
Lesson 1: “Worth its Weight in OIL“
This article emphasizes the singular tangible importance of oil as a fuel in particular (but also for all petrochemicals such as plastic). By singular importance, I mean distinctive among all other investments, such as currency, stock shares, real estate, and even gold- hence the replacement of gold in the saying “worth it’s weight in gold” to the subtitle of the article: “worth it’s weight in oil.”

I specified that the one nation most economically dependent on oil- vulnerable to instability in the event of the rise in oil prices that I considered inevitable- is the United States, and again I emphasized the immediate danger in real estate (and an eventual resolution of an underlying weakness in the US stock market):

Image via Wikipedia

“If there is no fundamental economic strength in the US today, US real estate must decline eventually. Weakness in US stocks or the dollar which leads to a “flight to safety” [i.e. to real estate] is not the same as strength in real estate. Real Estate markets are nowhere near as strong as oil markets.”

“Think about it. Oil is the leader [reversing trend in 1999]. US stocks followed [in 2000]. The dollar followed them [in 2002]. Real Estate will follow next.”

Again, that was published September 6, 2005. In fact, in some major US markets, such as Phoenix Arizona, the real estate market had already peaked in the weeks just prior to that article (mid-August). The housing sector of the US stock market (HGX) had also just peaked (the very end of July).

December 12, 2005: http://www.financialsense.com/fsu/editorials/2005/1217.html
RESCUING THE MAINSTREAM FROM “THE NEW ECONOMY”
I restated my emphasis of my increasing concern about the US real estate market and my skepticism for long-term stability of the US stock market, as well as my strong preference for commodities, including gold and of course oil in particular, which both continued to rise (and far more than the relatively modest rising in US stocks as well as the overall real estate market).

July 21, 2007: http://www.gold-eagle.com/editorials_05/hunn072107.html
How To Safely Gain Over 1000% In A Few Years…
By Picking The Best Discounts
This was just prior to the peak and collapse in US stocks. I also titled a section “why real estate is so risky.”

“All-time highs in gold, oil, stocks, and real estate have all been highly promoted in recent years. Enthusiasm is extremely high in general for these markets. So, these are not the most ripe to gain.” That’s right- I was already thinking of the eventual weakness in oil and gold- not just the immediate instability in stocks and real estate.
“…So, compared to everything else, bonds may be the ‘safer’ discount for now, [discounted = likely to rise in value] since the US Dollar Index has not yet established a low/rebound.” Bonds did soar, as stocks collapsed, and the US Dollar index bottomed in early 2008, then surged.

August 25, 2008: http://groups.yahoo.com/group/redpill_info/message/491
Stop Gambling: Quick!
Get Rich: Safely.
This article warned of the pending acceleration in the decline in US stocks.

March 3, 2009: http://www.gold-eagle.com/editorials_08/fibonacci030309.html
A Cure For The Common Misunderstandings
About Financial Markets
The title is rather clear.

3/4/09: Private distribution email (redpill_info link)

http://groups.yahoo.com/group/redpill_info/message/592

Without getting much deeper here into the volume of details available, note that you can easily browse through that yahoogroup and see a variety of messages on investments over the years, including many shorter-term forecasts. This email begins with one detail worth noting, though:

“By the end of trading today, I have exited all my mid-term positioning for a drop in stocks, which I expect to soon be reversing for a multi-month rally, though there is still a potential decline this week.”

The US stock market did indeed begin a multi-month rally the next week. The profit potential from that multi-month rally was tremendous, especially when compounded with profits from the previously recommended “short positions.” I knew that the coming multi-month rally had the potential to reach new highs in enthusiasm (confidence, sentiment), and in fact that target was reached recently, such that I am no watching closely for the first stages of a major stock market panic worldwide- much bigger than that of 2008 (or of 2000-2002, or even of 1929-1932).

Image via Wikipedia

Remember, some investors are always asking the question ”Which investments will go up next?” Always, some forecasters explore that question and see advance indications of how that question will be answered. We help you make the investments that are going up next be your next investments.

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published 2009: Sept. 22

re-posted 2012: Feb. 28

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promoting economic prudence

this video is a spontaneous summary of the below commentary:

Taxing of land ownership could encourage stewardship rather than hoarding. Taxing of land ownership (rather than taxing of spending and profit) could have the effect of encouraging private owners of land, especially of unused land, to either use the land productively or to sell it to others who may be willing and able to use it profitably.

Instead of investing in owning as much land as possible (concentrated hoarding), people might favor investing in using land as well as possible. Rather than simply hoarding land and even facing penalties for improving or developing it, land owners could be given an incentive to invest in the use of the land. That incentive corresponds to a reduction in the taxes on productivity, (income taxes) including the economic productivity possible with a certain portion of land.

Recently, revenues from income taxes have been plummeting in many parts of the world. I was one of many forecasters who anticipated the economic shift underway as well as the implications on government revenues worldwide and the likely reactions of governments to the predictable developments, which many governments apparently failed to predict.

Also predictably, taxes on spending (sales taxes) have also been generating decreasing revenues. Rather than penalizing people for productivity or spending, perhaps the decision-makers now have the will to try something rather radical: to tax the hoarding of unused land. Since the amount of land does not fluctuate, tax revenues could be forecast with precision as distinct from when taxing productivity (income) or spending (sales).

By imposing penalties (taxes) on spending and productivity, governments are also favoring the hoarding of unused real estate by those already wealthy. The wealthiest landowners do not need to earn additional income, as they can spend out of hoarded savings. While purchases are penalized by rates such as 5% (sales tax) and productivity is penalized by rates such as 38% (income tax), there is no similar penalty of the hoarding of unused land- just a tiny tax proportionately. There is also no penalty on hoarding wealth, but indeed that is given tax favoritism with income tax deductions for IRAs and 401Ks and so on.

In other words, the US currently has a tax structure that disproportionately favors the hoarding of unused land and savings, while penalizing spending (with sales taxes) and severely penalizing economic productivity (with income taxes). The penalizing of all spending and especially prudence (profitable activity) would predictably produce a severe instability in a nation’s economy.

Penalizing spending reduces spending. Rewarding hoarding encourages hoarding. With current economic conditions, to reward hoarding and penalize spending (especially profitable investment) seems not just negligent but malicious or even suicidal. However, that is the system we are inheriting. That is the system that the baby boomers have supported. It may have been wonderful in many ways. However, it may no longer be viable.

Penalizing prudence and profit reduces socio-economic mobility. Favoring hoarding discourages economic activity in favor of complacence.

Government spending is not economic stimulus. Government spending just means that spending that would have been done privately is being taken from private decision-makers and being implemented by bureaucrats.

For those who favor economic stimulus, private spending must be encouraged. Hoarding must be penalized- or at least not specifically rewarded as with current tax structures. How could the government stimulate economic productivity? First, reduce or eliminate rewards for hoarding of unproductive assets and then remove or reduce penalties for foreign and domestic investment (income taxes). By increasingly taxing the ownership of land, prudent stewardship of the land would be promoted.

Note that many people focus on how various governments spend money. I am not ignoring that subject, but simply focusing for the moment on what stimulates economic activity and what penalizes it. Different governments (local, federal, and so on) can adjust their spending in accord with the values and priorities specific to the various places and circumstances.

As a competent economic forecaster witnessing a variety of inaccurate and even illogical forecasts and promises, I simply note that penalizing economic productivity never stimulates economic productivity. The anti-productivity and pro-hoarding tax system currently popular in much of the industrialized world will either continue to stifle economic productivity or that productivity-penalizing system will be discontinued, slowly or suddenly.

Rather than penalizing spending (and the profits that result from prudent spending), why not reduce or remove the penalties against some or all spending? Why not penalize hoarding or at least remove tax advantages for those who hoard?

To me, this is not a moral issue. This is a very simple practical issue.

Governments and people who are willing to encourage stewardship and prudent investment will predictably attract economic activity away from governments and people who penalize stewardship and prudent investing. In a time when many governments are facing bankruptcy and motivated to do whatever it takes to attract lenders to buy new bonds from them, perhaps investors will direct their financial support to any government that promises secure tax revenues by rewarding prudent investing and responsible stewardship of the land within their jurisdiction.

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guaranteed results? ;)

Have you heard that annuity companies promise- even guarantee- that they will give you reliable, solid returns no matter what happens to the value of your investment? Say you invest $100,000 with an annuity company, and then the underlying investment value soon doubles. The annuity company may guarantee that your returns will remain at that doubled level for the rest of your life- even if the value of the underlying investment collapses!

How can they make such a promise? That part is very easy! The more interesting question is how can they keep such a promise….

 

Madoff’s office (Photo credit: eflon)

In the last few years, more people (and annuity companies) are questioning whether or not they can keep more of those promises at all. Some annuity companies have significantly scaled back the promises they offer in new annuity contracts- after witnessing the challenges posed by their existing contracts during the investment market developments of 2007 and 2008.

 

 

 

See 
http://www.kiplinger.com/features/archives/2009/04/krr_annuities_with_guaranteed_benefits.html
.

More companies like AIG may eventually collapse under the weight of any promises that prove implausible- breaking not only those promises, but breaking every other promise the company has made. By making speculative promises (annuity guarantees) that they may have little capacity to fulfill, some insurance companies may be making a desperate “all or nothing” gamble to attract new investors to finance their previously overly-optimistic promises. Does that sound familiar?

So, would you lend a lot of money (say, $100,000) to someone without asking them a few questions about their finances? When someone purchases an annuity contract, that is basically like any other loan except that the promise to re-pay is far more complicated than in most loans. How much do annuity investors know about the companies to whom they are lending? How well do they understand the contracts they are purchasing? How well do the commission-hungry insurance salespeople even understand those contracts? (I presume that most insurance salespeople have not read the details of the contracts they sell and would not comprehend the complexity of the contracts anyway even if they did read them.)

Many insurance companies have been shrinking in the last few years. Like any real estate investor who “maxes out” their credit cards after over-extending themselves by buying an overpriced home that they could not really even afford if it was not overpriced, some struggling insurance companies may have been more aggressive than ever in finding clever ways to attract new business (access new loans from investors). Companies offered historic commissions to their salespeople for the products that were most favorable to the company. Naturally, when a company realizes that they may go out of business without some aggressive innovations, they may be suddenly motivated to offer more complex and more optimistic promises- just like a politician who is losing support fast as election day approaches.

However, when a distressed borrower maxes out their credit cards to avoid defaulting on a mortgage, that actually does not make them a better risk for any new debt- but worse. Similarly, as annuity companies made more and more extreme offers to attract new business, then the more debt the companies compound with new extreme promises, the less valuable is any individual promise of that company. Distressed companies tend to attempt the same things that many distressed borrowers attempt- close the eyes tightly and speed up… or, in other words, borrow more aggressively and hope that external circumstances miraculously rescue investors from the recent natural results of their prior investments.

But can an insurance company really fail- like seriously? Well, how about the recent failure of giant US insurance company AIG, a global leader in the insurance industry?

Seat of the Supreme Soviet of the USSR, the Grand Kremlin Palace in the Moscow Kremlin, February 1982 (Photo credit: Wikipedia)

Note that when financial contracts are guaranteed by a government program- such as during the US savings and loan crisis in the 1980s- even the government guarantee program can also fail, as it did in the 1980s. Governments who over-extend promises not only cannot keep them, but may even collapse under the weight of unfulfilled hopes. Consider how quickly the public credibility of U.S. President George W. Bush went from a widespread sense of confidence and even heroism… to such historic humiliation that Bush was nearly invisible during the 2008 Presidential campaign.

When I first recognized in 2002 the probable future of the US and global economy, I specifically predicted that President Bush would be made a “scapegoat” for the sudden appearance of issues that were decades (or more) in the making. We might as well allege that he is to blame even for the S&L Crisis of the 1980s or the Great Depressions of the 1930s or 1720s. Such castings of blame would be no more useful than blaming an isolated real estate speculator, or an isolated realtor, or an isolated financial business.

People who invested in ways that got them the exact results they got can toss around blame for all the reasons they can invent that their own investment choices are not the singular issue of relevance. People who invest total faith in the words of desperate politicians get the exact results of that choice of investment. Similarly, people who lend money to unfit borrowers get different results than people who invest in certain other methods.

Specifically, people who lend money to annuity companies based on ridiculous promises of solid returns “no matter what happens to the value of your investment” may wish to review the meaning of the words “the value of your investment.” Maybe the insurance companies should not have done what they may have done… and this or that investor should not have done whatever she may have done… and this or that politician should not have done whatever he may have claimed to have done. So what?

If you or people you care about have invested in over-extended promises of annuity contracts or any other feature of the great Ponzi economy of speculative financial bubbles, will blame alter your future or your past? However we learn is however we learn. If you are committed to being confident in the future results of the investments you make, you may engage in a conversation that fulfills that commitment with whomever you deem fit to participate with you in that conversation.

Everyone else may argue over who is most to blame for the next sudden disappearing of real estate equity, disappearing job markets, disappearing insurance companies, and disappearing government budgets and programs. How ironic is it that those who actively participated in those developments may be the most motivated to name scapegoats, to dodge responsibility for the exact results produced by their own participation?

I have entered contractual promises that I kept. I have entered contractual promises that I broke. I have entered contracts that other people did not keep, but I chose to enter them, didn’t I? Live and learn!

 

–
JR
************

We do not have to sail in the direction of the wind, but if we ever sail off course, is it easier to change the direction of the wind or the direction of the sail?

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Responding with a curious courage… to recent financial developments

Responding with a curious courage… to recent financial developments

Quickly, let’s be clear what it does and does not mean to respond with a curious courage. I wonder if you can recall a time when you were not just already curious, but when your curiosity then led you to perceive a risk or danger that you only could have directly recognized through your own exploring, and then, after this discovery that you just made, you courageously redirected your behavior away from the perceived risk and toward a valuable opportunity that, again, you only discovered through the practice of curiosity. Let’s call that time now.

In contrast, what a curious courage does not mean is this: to identify how reality should have been, whether or not it was, then, when some pattern of reality did not fit with how it allegedly should have been, then to identify that pattern of reality as having been a problem, and then choose not to take any new initiative toward personal responsibility for one’s own future, but instead focus anger on whoever was convenient to blame for that problematic reality, and finally, identify whoever first provided you someone to blame for that problematic reality as the one to blindly rely on to almost fix that problematic reality next, since reality may persistently thwart reactive efforts to fix it by first blaming someone else for why it was not how it should have been (according to whoever denied that reality should be however reality actually already is).

Now, with a curious courage, we could be asking how did this particular apparent reality develop- yet with a specific concern for one’s own prior practices and the resulting effects produced from one’s own prior practices. That personal identification of one’s own prior practices as the primary issue related to the results produced by those practices is what may take courage.

So, let’s imagine that someone went to a casino and did very well for quite a while. They soon developed confidence and came back to the casino again and again. They made consistent unearned gains by using a certain method that worked for them over and over.

However, yesterday, they used that same old method but got a different result, that one which they do not value. Then, they kept trying that same method again and continued to get the result that they do not value. Soon, they lost quite a bit of their prior unearned gains- or even all of those gains as well as all of their original investment or even more.

Maybe they were afraid to even think about or look at their recent results. They may have been focusing on how much they used to have as if that was somehow more relevant than what they have left.

What would it mean to respond to this situation with a curious courage? Would it be courageous to look for someone else to blame for the recent results? Maybe you blamed the casino itself, or the government regulators, or a certain current or former employee of the casino, or perhaps your neighbor or even your neighbor’s dog.

Now, I might suggest that the particular investing method that you used is what produced the unfavorable result. Of course, it could be possible that the casino or government regulators did change some relevant rule, yet even if that were true, identifying such a change would not make your old method back into one that produces favorable results. If some rule had been changed and that is the single reason why your old method was no longer valuable, then knowing what rule has been changed might provide some insight into what other method might be valuable now, but you may not be interested in that yet.

After all, if the reason the rule was changed is because of your neighbor’s dog, then you could continue to use the method that stopped working but just get really angry at the dog. Or, while you continue to use the method that stopped working, maybe you could kill the dog, and then maybe someone would change the rule back so that your old method that stopped working might work again one day eventually, and you could just keep using it for as long as it takes, even though until that might happen you may be producing results with that method that you definitely may not value, because one day it could work again- you know, hypothetically.

That all could be true. One other thing though that someone with a curious courage might wonder is this: what about discontinuing the use of whatever prior method already stopped working to produced unearned capital gains? Sure, maybe the dog can be killed and the rule can be changed back to how it was and so one day possibly in the not-too-distant future the old method that stopped working may work again, but how about now? Sure, maybe someone can identify the neighbor that might have been in some way responsible for preventing you from continuing to multiply the unearned capital gains that you used to compound, and then maybe someone can get that neighbor to remedy the situation by paying to bail out the casinos that have suffered incredibly all because of that one dog. However, what about reconsidering the investing method which however long ago stopped working to produce the results you value?

Even if you advocate for a possible return back towards the prior situation, another possibility is that you explore modifying your investing method, at least until all dogs are killed so that you can know that no other dogs will ever prevent you from multiplying unearned capital gains with the single method that is most familiar to you, which is probably borrowing money to invest in real estate, but it could also be dumping money into various stocks and hoping that those stocks go up in value at least enough to balance any inflation and taxes.

I know a lot of people who I warned many years ago about the specific market developments that have since rendered their previously valuable methods worthless, resulting in losses of some or all of their unearned gains in real estate equity (or in US tech stocks or UK financial stocks and so on). Some of them even owe more on their mortgage than the collateral property is worth.

I also know a lot of people who have watched me make consistently accurately predictions of a variety of ups and downs in a variety of markets. Some of them may never give up the methods that they previously used to produce consistent unearned gains for them but that recently stopped working. Some of them may not ever explore a principle that works in all market conditions: partnering with the reality of market conditions and even partnering with someone who knows how to find opportunity in all market conditions now.

That might require a curious courage. Not everyone has that. For those of us who do have it, the fact that not everyone else has it is related to what distinguishes our results from their results, which includes the curiosity to be honest about the reality of market conditions, rather than defining some patterns of reality as “problems” to be automatically reacted to with personal blaming and blind devotion in the latest emergency rescue fix proposed, whether that is a political “solution” or some other silver bullet, like, whenever one has been confused, just investing in silver (or real estate etc) as the one magic solution to the persisting problem of reality not being the same as someone told you it should be.

Consider that reality is only a problem for those who insist on investing in opposition to it. For those with a curious courage, reality is an opportunity to partner. Now, with me and the investing methods that fit with partnering with the reality of market conditions, certain people get consistently favorable results in all market conditions. Not everyone will contact someone committed to partnering with reality to let me know that they are interested in consistently favorable results, but what about you?
–
JR
************

“Life is not what it’s supposed to be. Its what it is. The way you cope with it is what makes the difference.” Virginia Satir (1916-1988)

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