Welcome to Inside Wall Street with Nomi Prins! It’s the only daily newsletter featuring the insights of Nomi Prins and her team of global experts, including regular contributing editors Eoin Treacy and Laurynas Vegys. You’ll find all our issues here. And if you have questions or comments, shoot us a note anytime here or at [email protected].

It’s been a busy start to the new year here at Rogue Economics. Just before the holidays, we introduced our new editor, Nomi Prins, and her team.

Nomi told us why she left her successful career on Wall Street two decades ago and became its loudest critic.

And she warned us of the growing disconnect between the markets and the real economy.

Nomi’s mission is to put regular investors like you and me on the right side of that divide.

So far, Nomi and her team – including contributing editors Eoin Treacy and Laurynas Vegys – have written about often overlooked metals silver and copper, cryptos and NFTs, nuclear energy, the metaverse, infrastructure, the insurance industry, and more.

These all fall under Nomi’s five key investment themes for 2022, which are:

  • New Energy

  • Infrastructure

  • Transformative Technology

  • The Metaverse and Artificial Intelligence (AI)

  • New Money

You’ll be hearing more from Nomi and her team over the coming weeks about these themes… along with ways you can position yourself to profit.

But we want to hear from you, too. Nomi, Eoin, and Laurynas read each piece of feedback we receive. It helps them to know what’s on your mind.

That’s why, every Friday, we’ll dedicate an entire issue to your feedback, with in-depth responses from the team.

So please, don’t be shy. Write Nomi, Eoin, and Laurynas any time at [email protected].

Now, let’s kick off this week’s Mailbag edition with some responses to Nomi’s recent essay, Infrastructure Investment Is Key to America’s Future… And Your Profits.

In it, she outlined where the $1.2 trillion promised in the Bipartisan Infrastructure Law will be spent.

But, first up, reader Brian M. questions whether the government should even be spending this money on infrastructure in the first place…

Nomi, I’m certainly in disagreement with your thoughts regarding what our government’s role should be in infrastructure.

I seem to recall history as telling me the railroads were built using private money. Since when does it fall to Uncle Sam to fix private or corporate railways? I am certain rail companies will not haul freight at a loss… they are for-profit businesses, after all. Seems to me they should be footing the bill to update and upgrade to stay competitive.

Regarding U.S. port upgrading… I wonder if U.S. ports are the responsibility of federal authorities… Why do I keep getting notified every election cycle that I need to vote for a port commissioner and approve taxes to support our port? Seems to me these are run by local, not federal, authorities and they are a for-profit enterprise. Why can they not pay for these upgrades themselves?

I also seem to recall every time I fly and my plane lands at a U.S. airport, I’m charged a usage tax. Aren’t U.S. airports also a for-profit business?

I agree the U.S. interstate highway system has been neglected for far too long. I also seem to recall I pay federal highway taxes every time I fill my car up or buy a new set of tires. Granted, the U.S. Constitution places the burden of maintaining a highway system on the federal government. Why, however, is Congress so late to the game, and now, under leadership of good ole Joe, is there suddenly a crisis?

What has Congress been doing with all the tax money I pay? Isn’t that reserved for the highways?

Let’s both face it… The U.S. highways have been falling into disrepair simply because Congress has had what they considered more important issues to spend money on. I mean, isn’t Pork Barrel spending in their home towns of much greater importance than maintaining some distant highway?

You and I both know this so-called emergency they have concocted will turn into just another Pork Project designed to enrich their political allies. I am frankly shocked to hear you are in support of more government Pork Spending. It is precisely this out-of-control spending which has driven recent inflationary pressures, and it seems you desire more of it.

– Brian M.

Nomi’s response: Hi Brian, thanks for your note. You bring up some great points here. And it sounds like you have an eye on history, something I’m always considering.

Here’s how I see it… I agree that we should not have out-of-control spending; I’m all for accountability. As American citizens, we deserve transparency from our government, not corporate subsidies or bailouts at our expense.

The reason I wrote about the recent infrastructure bill is that it received bipartisan support. That rarely happens on the Hill. Presidents Obama and Trump both talked about a large infrastructure package (the details were different for both and for the two political parties, but the desire was there.)

Historically, presidents from different parties have accomplished lasting infrastructure projects that have stood the test of time.

President Lincoln’s administration, for instance, passed the Public Railway Act to help create the transatlantic railroads as the best mode of transportation across the country for commerce purposes. President Hoover commissioned the Hoover Dam, which was completed during President Roosevelt’s time and provided energy up and down the west coast.

And yes, private companies certainly played their role… and took their profits along the way.

Due to the pandemic, the opened-up central bank floodgates, and the mood in Congress, this bill passed under President Biden. The sectors I highlighted to focus on for investment opportunities are the ones that got the most agreement from both parties.

That’s why I believe they’ll have the most financial traction from an investment perspective.

The way to deal with inflation from an investment standpoint is to be aware of where it’s most acute and manage your portfolio accordingly.

Meanwhile, Cynthia P. is concerned that the promised funds will not be used in the manner intended…

We have little confidence that these massive funds will be used efficiently and not go to politicians’ political cronies. Congress has no accountability. I am not enthusiastic about massive spending programs. We need another way.

– Cynthia P.

Nomi’s response: Hi Cynthia, thanks for writing in. I agree there are considerable inefficiencies in government spending, project selection, and completion. It’s also true that corporate contracts are routinely doled out on the basis of crony relationships.

Knowing that all of this is going on, it’s important, when considering investment opportunities, to follow the path of that money. What sectors or companies is it flowing to?

In terms of needing to find another way, yes, ideally the taxes we pay would be used as effectively as possible.

That’s why I don’t just view these large government spending programs as costs. I also consider what sort of returns they can provide to us once any of that money is invested.

Once these funds are allocated, or topped up with private company funds, there should be a direct line to something useful and lasting for us on the other side. From an investment standpoint, that’s what I’m looking for.

And Rob C. already has his suspicions about where some of the promised funds will end up…

It doesn’t look like you accounted for the 10-20% that will be skimmed off the top of the pot. [Former Mayor of New Orleans] Mitch Landrieu will become a multi-multi-millionaire after this. And he will bring a lot of “friends” along with him. “Capitalism” at its worst.

– Rob C.

Nomi’s response: Hi Rob, thanks for getting in touch. I agree with you that there is excess in any funding bill, and also, that there is always “skimming off the top.” To me, this is unfortunately a given. And in the future, you’ll likely see pieces from me specifically on that topic as it relates to investment strategy.

In this case, I listed how much money is designated to various sectors. As fresh sums of money emanate from Washington, Wall Street, and the Federal Reserve, what I’m interested in doing is examining which sectors, companies, or asset classes are most likely to benefit, relative to other market or economic factors.

The way I see it, when there is a large new funding or investment bill from Washington, certain parts of private industry, including Wall Street, are watching that, too. When these interests join forces, related sectors and companies can profit on the back of that money flow. We’ll be watching that closely… and letting our subscribers know how they can profit along with the private interests.

Switching gears, Eoin’s article, A One-Click Way to Make the Insurance Industry Work for You, hit home with readers…

Excellent article on insurance. The cardinal rule of being an insurance consumer is never buy insurance for risks you can stand to take yourself. In essence, by not insuring risks you can tolerate, you are earning the excessive profit that the insurer otherwise would be making on you.

One of the best investments you can make is eliminating coverage on risks you can tolerate, and increasing deductibles as high as you could reasonably assume yourself.

– Walt H.

Eoin’s response: I absolutely agree with you on these points, Walt. Most people are over-insured because they fear being sued. They are willing to forego financial security in favor of convenience. They don’t think about how monthly premiums add up.

At the very least, everyone should be in the habit of shopping around for new policies whenever one expires. It is surprising the savings you can find.

One personal observation following my move from Los Angeles to Dallas recently is that Texas has many more – and cheaper – insurance options than California. It’s just one more reason I’m not sorry to bid farewell to the Golden State.

And Ed Q. has a question for Eoin on the outcome of his insurance claim…

Great story. Did you accept the $17,000 settlement from the insurance company? Insurance companies don’t fix/replace, they write checks. If you accepted the settlement, then you are part of the spiraling costs.

– Ed Q.

Eoin’s response: Hi Ed, I have a secret weapon in car negotiations – Mrs. Treacy.

We bought that car on New Year’s Eve 2013. We arrived at the dealership in the afternoon with our daughters (aged 7 and 5 at the time) in tow. We sat down and Mrs. Treacy began to haggle. She knew the salesman was looking out the window at his colleagues making sales. He wanted to get rid of us. So she dragged it out.

It helped that our youngest spilled chocolate milk all over herself. We gave off just the right air of disorganized parents. In the end, we got $7,000 off the list price.

The insurance company offered $27,000 to replace the vehicle, which was the lowest possible band on the Blue Book value. It offered $17,000 to take a salvage title. There was no way we were going to get the same deal again. And neither of us was in any mood to take a loss.

The experience taught me all I needed to know about the insurance industry: It works because ultimately, we all tend to act in our own self-interest.

Finally, Mike L. has some advice for Eoin about his choice of car for his learner-driver daughter…

Dear Eoin, any Porsche has a whole lot of power to be a kid’s first car (especially if it’s an S model). You might want to consider a sedan, something with a lower center of gravity – a plain vanilla Camry or Accord with a four banger?

– Mike L.

Eoin’s response: Mike, you’re absolutely right! And I plan on acting on your recommendation very soon.

That’s it for this week’s Mailbag edition.

Nomi will be back on Monday with Part II of her essay on the seemingly endless liquidity in the financial system… and how you can take advantage in your portfolio. (Catch up on Part I here, if you missed it.)

And tomorrow, we have a special invite from one of our colleagues over at Palm Beach Research Group. So be sure to stay tuned for that.

In the meantime, keep your comments and feedback coming at [email protected].

Regards,

Maria Bonaventura

Senior Managing Editor, Inside Wall Street with Nomi Prins


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