Dear Diary,
We got back from Argentina on Saturday…
The Argentines have seen it all. They know that politics, like markets, follow cycles. Good follows bad… followed by good again.
“We’ve had a rough time,” said one Argentine analyst we talked to.
“Because the government has been so stupid. But people now know it has been stupid. There’ll be a change in a year, and it will almost surely be for the better.
“The trouble with the US,” continued our friend, “is stocks are already priced for good things. The Fed has to manage its withdrawal from money printing flawlessly. Profits have to go higher. Inflation and interest rates have to stay at record lows.
“The economy doesn’t have to get a lot better, but it can’t give us any big surprises on the downside. And none of the geopolitical or other threats – like the Ebola virus – can get much worse.
“I’d rather invest in a market that is already priced for disaster and be pleasantly surprised when it works out better than expected. Going into a market that is priced for perfection is always a mistake.”
How to Get Rich
Meanwhile, the Dow was up to a new record on Friday, albeit on a small gain. Gold was unchanged.
So, let us begin a short series on “How to Get Rich.”
First, you have to learn to love being poor.
You may think I’m joking. I’m not. I’m just exaggerating a little. The point is you can’t be afraid of poverty. Because if you are going to get rich, you’re going to have to take chances.
You may start a business, for example. Or make an investment. Typically, you make money by going “all in” on an investment or business.
It’s similar to a military campaign. When you go on the attack, you concentrate your forces – your time and your assets – on a narrow front, where you have an advantage over your opponent.
Making money is competitive, too. You give yourself an edge by concentrating your forces on a limited front where you might make a breakthrough.
Later on – to protect what you have earned – you’ll take the opposite approach. You’ll disperse and diversify your assets.
The risk in concentrating your attack on a limited front is that it may not work out. You may lose the battle.
Then, you’re in a helluva mess.
Financially, if your concentrated efforts don’t work out, you could find yourself very, very poor. You may work for years on a startup, for example, only to have it go bust.
Or you may put all your money into an investment that you are sure will pay off – eventually. And then it never does!
If that is a risk you can’t stomach, you’re not likely to get rich. You’re better off sticking with the tried and true: a good job, a good career, a decent income.
Get a good education. Say the right things. Try not to stand out in any way. Be a good parent, a good citizen, a good person.
Live a good life… and enjoy it
Taking Your Chances
Getting rich requires a more original approach. You have to take chances. And you can’t be afraid of how it might turn out.
I was fortunate. I didn’t have any money when I was young. And I found that I enjoyed poverty. In fact, when I finally came into some money later in life, I almost regretted it. Some of my biggest pleasures and greatest sources of satisfaction were lost to me… as I’ll explain.
But first, let’s talk about poverty…
What’s really so bad about it?
It is certainly true that the “best things in life are free” – to a point.
There are three things in life that really matter: what you do… where you do it… and whom you do it with. Money is involved in these things, but not necessarily in the way you think.
When you are rich you can do a lot of things that look like fun. But from my experience… and the experience of the other rich people I know… these things are often not so much fun after all.
One friend made a fortune in automobiles. He figured out how to sell them. Then when he had perfected his business model, he took it on the road. He created mega dealerships all over the country. Then – still in his 50s – he sold out. He had a fortune.
But what to do?
“I took up big game hunting,” he told me. “I went on trips all over the world. Mongolia. Africa. South America. I went places where tourists never go. And I killed so many animals I had to buy a warehouse to store the trophies.
“But you know what? It was all BS. Trying to fill the time. Trying to pretend that it is important whether you kill the animal or not. It was exciting and fun for a while, but I got sick of it. I wanted to get back into the auto business. That’s what I really liked doing. That’s where the real adventure is.”
Building a fortune is more fun than having one.
More to come…
Regards,
Bill
Mailbag Edition
Working out how the world of wealth really works is the mission behind Bill’s new paid monthly newsletter, The Bill Bonner Letter.
Will it help you build a fortune?
Maybe. Maybe not.
But we can guarantee one thing: It’ll be controversial.
Here’s an excerpt from a letter we received from paid-up Bill Bonner Letter subscriber Janice B.:
See, we all ramble (that’s what editors are for), but really what was the point?
Tell us something we don’t know and don’t take so many turns to get there.
It felt like an expanded Diary of a Rogue Economist. I enjoy reading that occasionally, scan it for the interesting bits, and just delete if I don’t have time for it that day. Good value for a free blog. Mr. Bonner is most always entertaining but I don’t see value in paying for a newsletter like this.
Not everyone is unhappy paying for Bill’s new letter. Here’s paid-up subscriber Robert L. on the latest issue.:
What I think of this issue… is it causes me to think, literally. And I’m doing this thinking because I seek to learn. And I am impelled to learn because Bill has provided me with entirely new perspectives on human civilization and human activity, on History.
And this is from subscriber Jim M:
Bill and Company: I have been reading your writings as long as you have published them. At 67 I have read a lot of financial and other newsletters but I have always appreciated your down-to-earth style of presentation. I have purchased many of the Agora newsletters over the years but today I am focused on the Porter Stansberry Alliance membership.
I really like this latest product. This latest issue presented a nice compact picture of the European financial situation and is a summary of many other articles I have read. The story is clear and not tied down with a lot of financial theory to complicate the story.
Finally, subscriber Randall W. writes:
I wish I had some suggestions, but I am in awe at the depth and breadth of this piece. I doubt that this quality can be maintained over the long haul, but it’s a wonderful goal.