Listen up fives, a ten is speaking… about economics, investing, and the financial future.
I randomly came across this video the other day, an interview with CIA advisor and author, Jim Rickards, as I was doing some browsing on Yahoo Finance. I watched the video, and it was longer than I anticipated (no youtube timer bar to let you know how long it’s gonna be, unfortunately), as it intrigued me, and I found myself on a roll in researching some new allocations for my personal investment portfolio after viewing it.
In previous blogs, you may have picked up on my passion for personal investing strategies, financial planning, and the stock market (see post here). I started a portfolio in college when I had saved up $1K. At the time, I was interning for an investment advisor in Chico who specialized in the gay community as its clientele. The custodian of choice for that small business was TD Waterhouse (now TD Ameritrade). So that’s where I opened my account. Fast forward, TD Ameritrade dumped me as a customer when I lived in Australia when I tried to transfer savings into my account from an Australian account. They kindly told me they don’t accept transfers from foreign accounts and further, they were closing my account because I now had a foreign address. I had X number of days to move my money. Rude. Screw you, pal. So I moved everything to e*Trade, and haven’t looked back.
When I graduated from college, and began working in the real world, I stipulated on my payroll processing forms I wanted 10% of my net pay to go into my brokerage account in every pay period. Smart move. That led to a good 7 years of incoming payments into the account that I never really missed cause it never went into my checking account anyway.
Of course, this brokerage account was in addition to the company sponsored 401K plan. This is very similar to the 9% contribution rate (I think increases from 2014 going forward) for superannuation in Australia. Yeah, Australia actually has a law where you need to save for your retirement and automatically save a certain % of your salary. Maybe America could take a page from their book and require Americans to save for themselves, instead of relying on social security. I think most people my age already know we’re not getting any social security (they may as well call it social insecurity), and what gets deducted from our paychecks is paying for the generations before us.
I’d also opened an IRA at the same time to get the tax advantages of beginning to save for retirement. I won’t go into that too much, as I’ve since liquidated the account. I utilized my IRA for my purchase of a first home, which is one of the possible ways to withdraw without an early penalty when I bought my first flat with my ex in San Francisco in 2008. Right before the housing bubble burst. So, that was fun.
Anyway, back to my point. Where’d it go? Oh, there it is. It’s too important to be forgotten. The video.
I highly recommend you take a look at this video. You may not speak economics, or macroeconomic principles, or even foreign affairs. The argument the author of the book, Jim Rickards, successfully makes is “It doesn’t matter which snowflake starts the avalanche. What matters is getting yourself and your loved ones to safety now.” He does a great job of articulating all the ways China is so important globally and just how much of a wild card it is (which I never really had a full appreciation for before this.)
If you can get past the fact that a Republican politician is featured as being its largest governmental advocate toward the beginning of the clip, and the fact that this is an infomercial where the author of the book, “The Death of Money” is basically trying to sell you his book and DVD’s and such, the information shared with viewers is of utmost importance. He worked on something called Project Prophecy which looked at key economic and financial leading indicators to predicting a great 25 year depression.
I decided after viewing this that I needed to massively overhaul my portfolio. I had received some life insurance proceeds from my father’s passing last year, that has largely sat idle and fat and lazy in my account. It hasn’t done anything for me yet. I allocated that portion of funds yesterday in some interesting market moves. Whilst I’m hardly an alarmist, I can’t refute the evidence presented and what is happening on an international scale. It’s not just circumstantial evidence. The fact that the author has such an amazing title “CIA’s Financial Threat and Asymmetric Warfare Advisor”??? Wow. I wonder what the job description looked like for that… So let’s chat about the “so what” of this guy’s doomsday predictions for a 25 year Great Depression over a drink:
Here are the key takeaways I took from the video, which predicts a “financial Pearl Harbor” by April 2015.*
• The global reserve currency is moving away from the US dollar. He predicts the US dollar’s collapse, and recommends investing in the euro. Makes sense, if our currency is going down, the euro is stable enough and will likely benefit from the fall of the USD. Further, a new world currency (and potentially a new world order) may arise out of all this.
• Avoid investing in the financial services sector, as that will collapse again. This time, the Fed won’t be able to bail them out.
• Invest in what people can’t live without – water, food, energy, emergency medical supplies, and infrastructure, farms, and gold & precious metals. If currency loses value, you resort to your finances needing to follow the gold standard, or some other real asset that has value when money doesn’t.
• Look for companies with hard assets when you’re investing. Look at Warren Buffett’s recent purchases – the most intriguing and smartest of which is a railroad. It doesn’t run on oil or natural gas, and it can distribute products long distances.
• Avoid blue chips – certain blue chip stocks, that is. I have to admit, I left the room to use the restroom when he talked about which blue chips to avoid. But I’m sure it was important.
• Luckily, I still have my coin collection from when I was a kid. I told my mom not to get rid of my dad’s coin collection when he passed. Rickards recommends coin investments as well.
• Finally, if you decide you want to buy his book, supposedly he also shares which banks are the safest in the upcoming tsunami financial crisis part deux. He says if you stick with those “safe” banks, there are Certificates of Deposit that you can use to preserve the value of your capital (creatively dubbed, you guessed it, a “capital preservation strategy.”) He even supposedly goes far enough to recommend where the safest cities will be when the collapse of the markets and society occurs.
Bit of an alarmist approach, and he may be using a nonsensical slippery slope, methinks, to play to the fear people have of losing precious retirement money they’ve recovered since losing it in 2008. However, I don’t think it’s entirely pessimistic. Realistically, look what happened to Detroit when the automobile industry was decimated. Zombie apocalypse (when combined with Ebola?)… not entirely inconceivable.
One of the fundamental principles of my financial and economic education relied on the Efficient Markets Hypothesis. What this CIA Advisor has done is basically told me the financial equivalent that Santa Claus doesn’t exist. There is an intelligence war room where information known to the US Government about the market, but not publicly available to the people, is vetted while strategizing for our defense against financial warfare. The whole basis of the Efficient Markets Hypothesis is that all information is equally available to all market participants. He just told me select individuals know more. What’s he going to tell me next? That Tinkerbelle is a male fairy? I need a moment to sit down and absorb the gravity of this.
I love conspiracy theories – they really make my tail wag. Listening to this video was like one giant conspiracy theory – but I actually think it’s true. The economic indicators are there. He knows what he’s talking about. And, most importantly, he’s using data points from the past. Those who do not learn from the past are doomed to repeat it.
I haven’t nurtured my investment portfolio (which will basically be used to finance my dreams and goals) for nothing. I’m not going to lose it now if I have anything to say about it, not while I’m trudging through the daily grind on the precipice of being able to start soon on those dreams, not on my watch. I planted a small seed, and it’s grown multiple times over. I bonsai’ed that shit. It is my lifeblood – it reminds me what I’m good at, on those days when I don’t feel good at anything. It my little financial baby, if you will. My dreams are too important to me.
I am my own person, and I took some of the evidence he presented and made my own personal investing choices yesterday when I made some key buys. I invested in the following yesterday: water, emergency medical supplies and medical equipment, and I finally achieved one of my lifelong dreams since I first learned about money, investing, and the stock market. I bought stock in Pepsi. They own multiple food and drink brands that are cheap enough for public consumption in the event of inflation. Further, the water investment was already something I’d be thinking about given the drought in California and other states (see post here.)
Why did I re-allocate my portfolio after a doomsday interview infomercial? One could say I’m a fine case study in behavioral finance. If I ever went into higher education, this would be my field. I love learning about the impact psychology has on investing. Why some people buy high and sell low, how the market responds to news, and why we act the way we do when there is money involved. I sound like a rash investor who has just caught a whiff of the latest news, that is as all news seems to be these days, news that is a catalyst for fear and offers hope of avoiding disaster. I don’t need to know which snowflake is going to set the avalanche down the mountain at me. I’m going to reduce my risk I’m willing to take, because of how important my dreams are to me. I’m willing to sacrifice greater return to have peace of mind about my nest egg if any amount of Rickards’ predictions eventuate. What you choose to do, is up to you, dear reader.
Yes, my happiness, my dreams and my future are very much tied up in my brokerage account, but it’s not a love of money I have. Like Harry Potter, I lost my parents’ security and happiness to financial blunders, and learned all the worst ways to handle money (to be fair, some good ones too). I’ve heard the prophecy now, I need to continue figuring out what it means, and I must overcome evil and destroy Voldemort, so that I may live. Except for my financial future. And my lightning scar on my forehead is really a dollar sign. My college friends didn’t call me D$ for nothing.
Disclaimer:
*I did take and pass the Series 65 Unified Investment Advisor Law Exam in 2002, and I’d be remiss to state that future performance is not in any way guaranteed. Speak to your independent financial advisor/planner to help assess your portfolio and determine what investments/strategies are right for you, based on your risk tolerance, time horizon, and financial goals.