ST. MICHAELS, Maryland – The flag in front of our hotel flies at half-mast.
The little town of St. Michaels is a tourist and conference destination on the Chesapeake Bay. It is far from Orlando… and even farther from Daesh (a.k.a. ISIL) and the Mideast.
Out on the river, a sleek sailboat, with lacquered wood trim, glides by, making hardly a ripple on the water. Other boats are moored. There is scarcely a sound… except for a bell in town that chimes on the quarter hour.
We are staying two days. But we could happily remain longer and get to know the particularities of the place. What food do they eat here? What do they worry about? What stories do they tell each other?
We will come back to that in a moment. First, a look at the markets…
The Dow sold off yesterday. It fell 132 points or just under 1%.
As we pointed out yesterday, there are many reasons to believe stocks will go down… and few reasons to think they won’t.
A dear reader wrote to remind us that if you did the GDP statistics the way they did them during the Reagan administration, you’d see that the U.S. economy has been in a depression for the last 15 years.
You wouldn’t expect stocks to trade at record highs after 15 years of depression. But we’re getting used to weird and whacky things in the financial markets; who would have thought that people would ever pay for the privilege of lending money to bankrupt governments?
And yet, here we are, in the year 2016, with $10 trillion of government debt already trading at negative yields… and yields continuing to fall. And who would have imagined that we would live for more than seven years with the Fed’s key interest rate at an emergency zero level?
Maybe this time it really is different. Maybe, in the future, you will never earn any interest lending money to the government. And maybe, going forward, candidates for president will always be hucksters and hacks.
Yes, and in the stock market, perhaps the old pattern – up, down, up, down – that has held for as long, no longer applies.
“I will make a bold prediction,” says our old friend Doug Casey at Casey Research.
“I know I’ve been saying for a long time that this market is ready to blow up. But I’ll say it again. It is. And it will happen before the end of this year.”
But wait… a word of explanation…
We recently decided to invest – heavily – in colleague Chris Mayer’s stock picks. We do so realizing that the most likely direction for the overall stock market over the short term is down, not up.
But as Chris likes to point out to his Bonner Private Portfolio subscribers, stocks are more than just ticker symbols. He doesn’t invest in “the stock market.” He buys ownership stakes, at reasonable prices, in businesses that won’t wilt in a recession. At least, we can hope! Besides, we’re investing for the next generation… willing to wait through a 20-year drought before we get another good soak.
Now, back to the Chesapeake…
Out of Step
Maryland’s Eastern Shore is very different from the rest of the state… and the rest of the country.
Its fertile, flat fields… and ready access to the Chesapeake Bay… made it a prosperous farming area, beginning in the 17th century.
The large farms, usually worked by slaves, were separated from Annapolis and Baltimore by the bay, leaving the area with its own conservative, and backward-leaning, culture.
When the colonies announced they were rebelling against George III, the Eastern Shore remained loyal. The planters here had no quarrel with the British. Most of them were themselves British… proud of their heritage… and eager to retain ties with the homeland.
So, as the rest of the nation celebrated independence, the Eastern Shore counties drew their curtains in silence and lit candles.
Come the War Between the States, and the Eastern Shore was out of step again.
It’s difficult for a man to see something when his wealth depends on not seeing it. Already, in most of Maryland, slavery was being given up. Not that the Marylanders on the west side of the bay were any more ethical, but they could see that slavery no longer paid. It was too easy for slaves to escape to the North.
The Eastern Shore was more isolated, making it harder for slaves to get away. And its field crops could be worked profitably by forced labor.
Flag of the Conquerors
In the mid-19th century, proposals were entertained in the state capital, Annapolis, for the Eastern Shore to secede from the rest of the state.
But the state held together, with divided loyalties and most of the young men left to join the Confederate cause.
In fact, the last soldiers to surrender – those accompanying the president of the Confederacy, Jefferson Davis, in his flight to Florida – were from Maryland’s Eastern Shore.
The “shore” remained cutoff until the Bay Bridge was built in 1952. (We have a vague memory of crossing the bay on a ferry, just as the bridge was being built. It was an adventure and a delight! Then, the bridge ruined the area. Now, it is little different from the rest of the state… with Chick-fil-As and Walmarts and long lines of traffic to and from the Atlantic beaches.)
And today it is not the Talbot County flag flying at half-mast. It is not even the flag of the sovereign state of Maryland. It is the Stars and Stripes… the flag of Lincoln, Sherman, Hillary, and that rascal husband of hers. It’s now the flag of the gentle of Maryland’s Eastern Shore… it’s the flag of the conquerors… of a vast government with outposts all over the world.
At home, the U.S. covers an expanse of mountains, deserts, richly watered deltas, uplands, lowlands, borderlands, cold places, hot places, every kind of place you could want.
From “sea to shining sea,” the country is inhabited by all manner of people. “Americans” include Italians, Native Americans, Kurds, Russians, Japanese, Scots, Irish, Vietnamese, West Africans, Mexicans, Cubans, Guatemalans, Indians, Chinese, Germans, Swedes – you name it.
You can’t even ask the questions: What do they think? What food do they eat? What do they do? You will get millions of different answers.
And the more you ask, the less you will know. What is an “American”?
And the more you see of it, the less you know what the country looks likes. There are no particularities to hang onto… to have and to hold… to develop a genuine affection for.
The U.S. is too big… too varied… too much of everything. You can’t fix a single view of it, even in your mind. For there is always some other part at odds with it.
You can’t get attached to its people either; there are too many of them of too many different kinds. You can appreciate them – but in the abstract, not in the particular. It’s the difference between liking women… and being married to one.
But now our problems, challenges, and discontents are big. They are national and international.
We cannot see them. We cannot understand them. Instead, we draw their measure from the news media… based on a flag that flutters and sags, depending on which way the wind is blowing.
Mark Morgan Ford, founder, Wealth Builders Club
One of my favorite “off-Wall Street” investments is something called a “tax lien certificate.”
As an investor in these certificates, I essentially act as a bank by loaning money to individuals who had failed to pay their property taxes. For paying those back taxes off, I would receive guaranteed returns on my investment…
As much as 18% per year, in some cases.
What happens is this: A homeowner, for whatever reason, fails to pay his property taxes. The taxing authority (the state or county) then puts a lien on his property.
Imagine a lien as one of those wheel locks they put on cars belonging to drivers behind on parking tickets. The car owner gets to keep his car, technically. But if he wants to drive it, he has to pay off his fines (plus any late penalties) to remove the lock.
In the case of property taxes, a tax lien has top priority in terms of being paid back. It comes before the mortgage and before any other liens as well.
If the owner wants to sell his property, he must pay off the tax lien – that is, the investor – first.
The back taxes are owed to local governments, but in order to stay out of the collection and liquidation business, counties sell these liens to private investors. They do so through “tax lien auctions.”
That’s where my partners and I came in.
We would buy these tax lien certificates from the counties selling them. We were acting like private bankers and getting private-banking returns. Our loans were secured by the properties, ensuring that our borrowers were legally bound to pay us back.
Tax lien investing is profitable and safe – safer than the stock market. It’s contra-cyclical, giving good returns when other markets are going down. And finally, the barrier for entry is low. You can get in for as little as a thousand dollars.
As an added bonus, for decades big institutional investors were pushing down returns and crowding out individuals. Thanks to the Internet, it’s again possible to earn excellent returns from this opportunity, if you know what you’re doing.
Editor’s Note: Tax lien investing is just one way Mark has found to boost his income. He’s spent five years working on a series of essays, reports, and how-to manuals to help people supplement their Social Security and shore up their retirements.
He calls it the Extra Income Project. It has dozens of individual income strategies ready right now and more on the way. At least one (and probably a half dozen) of these income opportunities will be right for you. For more information, read on here.
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More great reader feedback today on whether it’s our duty to fight when the Deep State asks…
Your recent writing about the Deep State and why some choose for fight for them when they call (Viet Nam) was insightful.
[Former U.S. secretary of Defense] Robert McNamara was a frigging coward. They should have hung him with those metals the Deep State awarded to him.
And sorry, but I was not moved at all by an old man crying about his mistake years later. McNamara never suffered or died from his mistakes or cowardly ways. He was glorified and handsomely rewarded for sending so many to their deaths. How anyone can celebrate this is truly depressing.
I was in college when Viet Nam was taking place. I partook in many demonstrations that turned into riots. At Southern Illinois University they thought it the right thing to do to open a Viet Nam cultural center during the war. Big mistake. Riots ensued on campus when the police sided with the Deep State’s view.
I for one will continue to challenge them and do whatever I can to defeat them – futile or not.— Michael M.
Your thoughts on the Deep State are mostly right on. I’m with you 90% of the time.
Regarding wars: Yes, most of the time we should not fight them. Vietnam is an easy target. How about WWII? Are you content to live under the tender mercies of the Nazis and Imperial Japan? Talk about Deep States.
Tough to know when to give up the cushy life and fight. It does happen from time to time. And from time to time, it does matter.— Alex M.
When I was 18, I saw strange things in ‘Nam, like dressing bodies in VC cloths and stacking them like wood for the winter. Me and the guys just laughed, shrugged, and went back to the war.
We have to declare war to fight war and then kick butt. I’m sure some of you believe just the opposite. As long as you give me the right to state my beliefs, I’ll honor your right to believe what you want. We’ll even discuss the differences.
The lack of discussion in our branches of government with the purpose of meeting at the top has caused so much harm to our country. We will always have wars like the Bush/Obama wars until “we the people” come together at the top a say “no mas.”— Jim T.
You continue to be my favorite pontificator. You tell it like you see it. But one size does not fit all. And Vietnam is too big a topic to tackle in one article.
I went to Vietnam as a young (23) Marine Lieutenant pushing a rifle platoon. I do not regret the experience. I was never angry at the VC, and I knew that the NVA were a formidable opponent.
All wars are stupid, but the Deep State doesn’t care. I am forever grateful for what Vietnam taught me: (1) Life is precious; (2) The rural Viets were incredibly poor; (3) They were oppressed and had been for more than a thousand years; (4) They were worth fighting for, even though that wasn’t the Deep State’s motive.— John W.
Why am I the only one who remembers the U.S. bought a used war from the French because it was bankrupting that country?
That was reported in mainstream newspapers back then. Funny how major facts go underwater. There are a lot of them down there.— Emily S.
It is our duty as Americans to defend our way of life to the best of our ability. This may be interpreted by some as going off to fight, by others to go to protests, and others still to demonstrate not so quietly.
We are ALL responsible for the action our government takes, because this is our country. It is far easier to stand aside and criticize those who contribute to the promise of America than it is to have personal risk as a result of your actions.
When it comes to ham and eggs, the chicken is interested… but the pig is committed. Maybe if we had more pigs, there would be a better outcome.— William C.
In Case You Missed It…
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To learn more, view Bill’s special invitation to you.