Greg's Note: The Chinese use the same word for crisis as they do for opportunity. Well, Capital & Crisis' Chris Mayer knows a thing or two about both concepts, and he thinks they may be on to something. Is he right? Does every bad situation create some sort of new opportunity? Let us know what you think by writing to greg@whiskeyandgunpowder.com. Whiskey & Gunpowder
When you have a lot of problems you also have a lot of opportunity. I want to start with some wise words from John Templeton. Templeton actually died a few weeks ago at the age of 95. His is a great story. Born and raised in rural Tennessee, Sir John was the first person in his town to go to college. He went to Yale during the great depression and when things got tight, his father could no longer keep him there. So he helped pay his own way through college with his poker winnings, which sort of adds to his legend. He eventually went on and won a Rhode Scholarship, went to Oxford and set up in Wall Street in 1937. ~~~~~~~~~~~~~Special~~~~~~~~~~~~~ The Coming Super Shocks… And How You Can Profit There's something to be said for being prepared. You don't want to be caught up in the coming financial storm. You don't want to be one of the unlucky who loses everything. But you don't have to stand pat either. You can actually profit from the coming economic super shocks. To get your free survival guide, click here… ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Now, you can imagine what the world look like in 1937; a lot of bad news, the Great Depression, war looming on the horizon. And in this environment of chaos, Sir John got to work. One of his famous bets came to him in 1935 when he bought 100 shares of every stock trading for less than a dollar in the NYSE. He made four times his money in the next four years. That was sort of a pattern throughout his career. He was always an investor who was able to find the opportunity during times of market upheaval. He famously bought stocks the day after the '87 crash, for example. He also bought airlines after 9/11 and made a lot of money in a short amount of time. So I think he is a good investor to focus on these days because, as investors, we have so many problems to deal with in the marketplace. I also want to say he started his famous fund in 1954 and it was incorporated in Canada because there was no capital gains tax there at the time. And during 1954–1992 he racked up an average return of 15% a year. That's a great track record over a long period of time. He also offered a lot of phrases that we take for granted as common sayings today. "'It's different this time,' are the most expensive words in the English language" — That's Templeton's. Maybe his most famous saying is, "Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria." He later added that the best time to buy is during points of "maximum pessimism." When I think of Templeton's influence on me, I think of two things. One is that he was one of the first really successful investors to invest overseas. He was an early investor in Japan, for example, and he drove home the idea that a quality investment idea doesn't have to be large, U.S. blue-chip company. He was equally at home investing in South Africa, Australia, Japan, wherever. The second thing I think of is that he had this focus on finding great opportunities even when markets seemed like a really bad place to be. He wrote this when he was approaching his 95th birthday: "Throughout history, people have focused too little on the opportunities that problems present, both in investment and in life in general. The 21st century offers great hope and glorious promises. It is perhaps a golden age of opportunity." Now, you might think he's nutty saying that. And when you look, there is a lot of bad news out there. I think the U.S. economy is probably in recession and Wall Street is a disaster. The dollar is in the tank, debts are high and taxes are going up. My state of Maryland, for instance, just passed the largest tax increase in state history last year. That is pretty amazing considering all the things people get hit with nowadays. And now we are getting hit with higher taxes too. California also had an increase in taxes by some large amount, and Sacramento already has higher taxes than NYC. So to top it all off — as if that's not bad enough — it's also an election year! So we have to listen to all the politicians tell us how they are going to solve our problems with a wave of their magic pen. ~~~~~~~~~~~~~Special~~~~~~~~~~~~~ Your Secret Boardroom Transcripts Imagine being a fly on the wall in the boardroom of some of America's biggest companies. Imagine the inside information you could obtain and how you could use it to your benefit. You have the chance to get all that information before the media reports it. And best of all, it's completely legal. Click here to be the first to know right away… ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Today, the big issue is scarcity. When you think about how the prices of everything from food to gasoline are rising, you might think we face scarcity in a lot of things. This may or may not be the case. One thing we don't have scarcity of, however, is paper money. The money and credit growth for the last 12 months is really incredible. The Australian dollar, the Canadian dollar, the Chinese Yuan, the euro…all these currencies are increasing at 22%, 21% 18%. The only major currencies that are not increasing at a double-digit rate are the Japanese yen and the Swiss franc. So, when we look at market prices, this distorts what we see:
For example, let's look at oil. Every time I hear that oil is in a bubble, I think of this chart [above]. Basically what it tells you is that as money supply increase, the price of oil has increased along with it. In fact, roughly 87% of the increase in crude oil can be explained just by the increase in money supply. So when you see oil make this huge jump, you have to put it in context. This is true for all commodities. It looks like we have skyrocketing prices, but what we are in fact seeing is the collapse of the dollar. It is just another factor that makes investing difficult, another factor we have to consider. Regards, P.S.: Do you think John Templeton would let the current market get him down? I don't, and neither should you. Sure, it seems like good opportunities are hard to find these days, but believe me they're still there. In fact, I know of one investments that will actually pay you income checks. That's money you can count on. And it may never run out. Click here to find out when your first check will arrive… |
Whiskey & Gunpowder Special Reports New "Backlash" Set to Rocket Oil Past $150...and Send Gas Soaring to Over $6 per Gallon The 10 Shocking Reasons for China's Pollution Problem Geothermal Energy: Investment in the Future Here's One Coal Stock That's Set to Skyrocket Investing in Exchange Traded Funds The Real Story Behind the True Gold Bull Market If someone forwarded you this copy, please look here to start your own subscription. Wanna let us know what you thought of today's issue? Now you can... click on this link. Whiskey & Gunpowder is a free e-mail service brought to you by a team of rebellious brigands. If you have not already done so, please click here to confirm your subscription. This will help us ensure you get every Whiskey & Gunpowder without interruption. Are you having trouble receiving your Whiskey & Gunpowder? You can ensure its arrival in your mailbox here. Please note: we sent this e-mail to lemmetry@gmail.com because you subscribed to this service. To end your Whiskey & Gunpowder e-mail subscription, click here. Nothing in this e-mail should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice.We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. © 2008 Agora Financial, LLC. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the World Wide Web), in whole or in part, is strictly prohibited without the express written permission of Agora Financial, LLC. 808 Saint Paul Street, Baltimore MD 21202. |
