Death By a Thousand Duck Bites

Death by a thousand duck bites.
That’s what’s happening to you if you’re still living in the nineties.
I received an email from Bob. He says, “How can you keep pointing out industries and stock picks, then take congratulations for calling the crash and keeping us out? Isn’t that somewhat disingenuous?”

Here’s my response.

First of all, the people saying we saved them money, they’re in the thousands. I, personally, haven’t said a word about it. It’s the people who call here, email me, and come to my personal appearances that say those things.

On the air Monday, no less than Dr. Arthur Laffer, one of the most important financial minds of our times, an advisor of his own to way over a billion dollars, told us the same thing. I was shocked and thrilled to hear him say it on the air, I don’t mind admitting. It’s a thrill when somebody like that says things like that. He gave this show credit for keeping him out of stocks and saving him millions of dollars.

I didn’t do it, but I’ll take the credit.

So now how can I like companies and still take credit for not liking the stock market? Easy.

At the time of the crash I had maybe 15 or so percent of all investment money in stocks.

Now, after coming off the bottom, maybe I have around 24%.

Right now there’s much more money in bonds that are making great profits right now. Much, much more. There’s also much more money in private equity deals, which can give terrific returns. These deals are centered around projects like building cities, the Children’s Educational Network, lots of things.

The great thing about private equity is, it isn’t about crazy investors guessing their psychological state a year from now. It’s real simple. If the business makes money, you’re richer. If the business doesn’t make money, you aren’t. If it loses money, you’re poorer.

It’s times like this that I like substance over herd psychology.

And yes, I take the credit for knowing it.

If you think about it, you can’t just see these things when they are happening in order to make money. You have to see them months, sometimes years, in advance. That’s where you make the big money. And if you’ve noticed, you could just take some of the big calls from this show in the last ten years. If you just caught those few days, you’d be much, much richer.

Unfortunately, I never know when the big day is going to be. If I did, I swear, I’d announce it so you could save a lot of time and watch Desperate Housewives the rest of the time.

But I don’t, so everyday I try to make the big important call.

In 2001 we said, “We can’t see taking all that risk with companies that are competing with each other so stiffly. I’d rather be a lender.”

We bought tons of mortgage bonds, which made close to double digit returns through that whole bear market, all the way until now!

In 2003, I said, “This is the time. Believe this rally. THIS is going to be the new bull market.”

Back to stocks.

Since 2006 we've said, “The economy is softening, worse than anybody expects. The stock market is losing ground and our market x-ray is showing progressive disenchantment with taking risk in the stock market. Start lightening up.”

Another pretty good call.

So any stocks in these last few months have been bad. But look, if you have most of your money somewhere else, and a lot of it is profitable, you’re doing pretty well. Especially when you consider that the rest of the world is losing 40% of their money.

On a relative basis, you are now 30 or 40% richer in terms of what you’re going to be able to buy. In other words, if you have a deflation of everyone else’s assets, and not yours, you are richer. Do you get that?

The hard game now is calling the bottom of the stock market. The easy game is buying corporate and municipal bonds and selling treasuries short.

That’s easy money compared to the stock market, and many of you are participating in that because you learned about it here on my radio show, and in my blog.

So am I proud? Sure I am. And sure, there is always going to be something I own doing poorly. But on a relative and absolute basis, I’m getting richer, the people around me are getting richer, and if you aren’t, maybe you should be taking more interest in the learning. The old, easy, appreciating world is gone, folks.