by Owen Sullivan
On Apr 16, 2018
One of the key skills for prepping for crisis is knowing the difference between a legitimate threat and a bowlful of hot air. James Altucher knows the difference… and he’s discovered how to make money from it.
by Owen Sullivan
On Feb 5, 2018
You might know Jim Rickards as the New York Times bestselling author of Currency Wars and The Death of Money. I know him as the man to turn to when an unsolvable problem needs to be solved. Today, I asked Jim to talk to you about how to invest when crisis could strike at any moment.
Dear Money & Crisis Reader,
One of the key skills for crisis prepping is knowing the difference between a legitimate threat and a bowlful of hot air.
This has never been more true than it is today, in the era of the 24-hour news cycle.
To fill all that airtime — and keep it entertaining and sexy — news organizations will resort to lazy shock tactics and blow small stories way out of proportion.
Next thing you know, you’ve got a panel of pundits having a six-way screaming match over something insignificant.
Now, you and I are savvy enough to simply ignore all this bluster. But a colleague of mine, James Altucher, has actually discovered a way to make money from this insanity.
This is a little out of my wheelhouse, so I’m just going to let James tell you all about it below.
All the best,
Editor, Money & Crisis
P.S. In the past 20 years, James has gone from dead broke to multimillionaire three times. He’s started 20 businesses… authored three best-selling books… and what he’s learned in the process will shock you.
For a limited time, James is giving away free copies of his new book, The Choose Yourself Guide to Wealth. Claim yours by clicking here.
Profit From the Irrational Fear of Others
By James Altucher
If you’ve ever followed anything I’ve written or interviews I’ve done, you’ve probably heard me say that the stock market is a scam.
And that’s because, quite frankly, it largely is.
So many public companies manipulate their numbers, so many mutual funds and stockbrokers have a bunch of hidden fees.
But that doesn’t mean you can’t make money in the stock market.
In my years of investing, I’ve probably tried every strategy there is out there. There are only about three that I really care about. This is one of them.
In fact, if I were to die tomorrow, this is the strategy I would tell my children to use to invest the money from my life insurance policy.
And the best part is you’ll never hear any investors talk about this strategy, because it goes against everything they believe about investing.
So here it is. This is one of the most important strategies, if not the most important, that I could give you. This is what you should always look for when investing.
1) Find the irrational fear
In 2008, the oils markets were crashing and so everyone thought that Texas and California were about to declare bankruptcy. Everyone was talking about it on TV and in the news.
They had no idea what they were talking about.
It’s not even legal for a state to declare bankruptcy; the founding fathers wrote it into the Constitution.
The only way a state can even get out of paying back a debt is if first they fired every single public servant and every public school teacher, etc.
I would go on CNBC and have these arguments with people. I’d go on and say that it wasn’t going to happen. That it wasn’t ALLOWED to happen.
But still these guys on CNBC — professional pundits and investors — could not wrap their minds around this.
The point is, there’s always an irrational fear somewhere in the market. It’s the financial version of fight or flight.
Except — and this is the key — investors ALWAYS run.
Fight that fear, and you’ll be surrounded by solid opportunities at a huge discount.
Which brings me to…
2) Find assets or stocks that are discounted because of the fear
Especially when there’s no actual risk.
Here’s a funny story. There was this food distribution company based in China with the stock symbol HOGS.
Then around 2007 or 2008, the swine flu became this huge health concern. All of a sudden, that HOGS stock was down 20% in ONE DAY.
All because everybody for some reason thought that the swine flu was going to affect this company that had absolutely nothing to do with it.
Here’s another story.
In 2008, when everyone was afraid Texas was going to go bankrupt because of the crashing oil market, I found a bunch of bonds issued by Texas towns and counties that were trading at a huge discount. They didn’t even rely on the oil industry for most of their revenue. They were just being caught up in the fear.
So not only was there this irrational fear that Texas towns would go bankrupt, but it was temporarily making these specific assets — that had nothing to do with this story — way cheaper than they should have been.
It presented an incredible opportunity to buy.
That’s exactly the kind of thing I’m looking for. That’s exactly what I’m always researching. That’s what I would recommend my kids to do and that’s where I think people should put their money.
3) Only put your money in investments where the price is at a huge discount to the underlying assets
In other words, if a company has $100 worth of assets, and you could buy it for $70, that’s a great investment.
Let’s look at those Texas bonds again. Not only were they trading at a major discount, they were also paying a huge tax advantage yield.
I want my investments to be discounted below the value of the assets they own. I want that extra margin of safety. It’s a double discount on the underlying assets. I don’t pay full price for my investments.
That’s how people get rich. That’s one of my favorite ways to invest. And I’m not alone.
The richest investors in the world do this as well. Bill Gates. Warren Buffett. Carl Icahn. George Soros. They all do this.
Editor’s note: If you’d like to hear more from James, grab a free copy of his new book The Choose Yourself Guide to Wealth. This book is packed with strategies for creating personal wealth, including 12 unusual habits James uses to grow his own money. Click here to claim your free copy.