NEW AIRBNB, FUKUOKA – We are hobos. We drift from town to town like leaves in the wind, looking for cheap digs and high-speed internet. When we find somewhere we like, we stay a few days…
We got on a train today without knowing where we’d get off.
First we thought we’d go to Hiroshima. But Hiroshima came and went. Then we thought we’d go to the end of the line, a place called Kagoshima, near the bottom of Japan. But it was getting late, and it seemed like it might rain, so we got off in Fukuoka.
I dropped the family at a restaurant in the train station and went to look for somewhere for us to stay…
Simple Strategy
More on that in a moment. First, this is our simple strategy for getting rich with public investments over the next 20 years…
Buy the stocks of the best dividend-raising companies in the world when everyone else is selling them. (This happens once every decade or two.) Then wait.
Do nothing. Read some books. Start a new hobby. Go fishing.
Then, when everyone’s euphoric and buying stocks, sell. And turn it all into gold. (This also happens once every decade or two.) Then wait.
Do nothing. Read some books. Start a new hobby. Go fishing.
Right now, stocks are EXTREMELY overvalued. As in, breaking records. This is one of those rare times when you sell stocks and turn it all into gold.
Kate and I sold it all and turned everything into gold last year. Now we’re waiting for the moment when everyone hates stocks and wants to sell.
I CONSERVATIVELY expect to quadruple our money over the next nine years. And then quadruple it again over the following 10 years. A 15x return.
The first quadruple comes from the Dow-to-Gold ratio falling from 19 (where it is today) to below 5. (Bill Bonner calls this its rendezvous with destiny.)
The second quadruple comes from the effect of buying the world’s best dividend-raising stocks at low valuations and compounding growing dividends for another 10 years.
In the meantime, I’m going “fishing.”
I found an apartment for us without any trouble. It’s clean, comfortable, and in a good location, and it has high-speed internet. I think we’ll stay here for a few days…
– Tom Dyson
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FROM THE MAILBAG
Lots of questions about the Dow-to-Gold ratio… and some about Tom’s next (and current) stops on his two-year journey around the world…
Reader question: I’ve enjoyed your adventures immensely, but I’m wondering why you have no plans to visit South America? I spent seven months traveling from country to country/hostel to hostel a few years ago and had a great time. I couldn’t recommend it more highly. It’s a spectacular continent.
Tom’s response: We love South America. The whole continent is cheap. We may go there next year. (I wrote about that here.) I noticed the Brazilian real is the latest currency there to fall to all-time lows against the dollar.
Reader question: Do you have any concerns of radiation from Fukushima? I have heard some chilling stories about ongoing leaks of radiation there.
Tom’s response: No. We’re far from Fukushima.
Reader question: Tom, if the Dow-to-Gold ratio you are targeting is reached by gold standing still and the Dow collapsing as in 1929, will you still prosper, or should you have shorted stocks? (Note that by several valuation measures, the market has only been more expensive in 1929 and/or 2000.)
Tom’s response: Yes, I will still prosper because I will have preserved my purchasing power in gold, and I’ll be able to buy 5x the number of shares in the great dividend-raising stocks I want, i.e., my purchasing power will have gone up 400%.
Reader comment: If the Dow, near record highs, were to stay near the same level, gold would have to reach about $5,500 per ounce to hit your magic number of 5. That seems to be quite a reach! Enjoy your posts.
Tom’s response: Doesn’t seem like a reach to me. When the market starts sensing inflation – the type of inflation that undermines bond and savings account returns and gives pensioners anxiety – trillions of dollars will stampede into gold. It’ll be carnage.
Reader comment: I live on top of a gold mine, but I have to buy gold stocks to get my investments into a safe haven. California is full of gold, but forget it, because the politics are designed to keep you from ever reaping the rewards on your own, i.e., digging for it.
Anyway, I read your notes and am somewhat surprised at how smooth and safe your trip has been. Some of the tips you have mentioned for investing in gold I, too, have discovered. I can say that for most of us laymen out here, it’s a long process to find the right combination for our needs.
For now, I am following the tide and adjusting according to what I am learning, so keep up the thoughts and challenge me on some of the ideas I have formed.
Reader comment: I lived and worked in Sendai, Japan, for 12 years and met my USA- born wife; we moved to China and lived there seven years, and then to Vietnam for eight years. So I love reading your take on the experiences you are having…
If you don’t go to Vietnam, you are making a big mistake. It is cheap, the people are lovely, and the country is beautiful. (They love Americans and have forgiven us, and they are moving on.) Think about it seriously.
My wife and I celebrate our 27th anniversary this coming year. I’m an educator and love your style of education.
Reader comment: After living in New York for close to 40 years and then back here in Japan, a lot of things you mention in these letters let me rediscover Japanese culture. THANK YOU.
I recall back in the 1970s and 1980s, even in New York, Americans used to say, “After you,” – “Thank you,” “Appreciated”… Perhaps it is different after the Lehman shock…
I miss good old American culture… Perhaps I am somewhat mixed up Japanese-culture-wise… 40 years being away is a LONG TIME.
By the way, I have been enjoying your letters so much… Just wanted to let you know.
Reader comment: You did bring some humor to me last week, Tom. “But I’m having fantasies about ‘giving up’ technology when we get back to America… In this fantasy, I live in the ’80s again. And read books. And write on a word processor. And call people on the telephone. And read the newspapers. And write letters to friends. And look you in the eye when I meet you for lunch…”
Yep. Giving up technology – except for books, a word processor, a telephone, and newspapers. Thanks for the smiles. And my best wishes for reconstructing your lifestyle. Choose wisely.
Tom’s response: Thanks to everyone who wrote in! Please keep sending us your comments and questions at [email protected]. Kate and I read every one.