“There’s no better way to overpower a trickle of doubt,” Frank Underwood says in the hit Netflix series House of Cards,“than with a flood of naked truth.”
I was watching the show last week when I noticed something strange…
It was a scene of Frank sitting in an alley. What struck me was how familiar the alleyway looked. Like I’d been there a thousand times.
I watched on…
It hit me.
That’s the same alleyway I walk through nearly every day. It’s the one right behind our Baltimore HQ.
House of Cards was… literally… at our backdoor.
And then, get this…
One colleague, Matt Insley, discovered something happening (right now, in fact, as you read this) at Baltimore’s Horseshoe Casino only miles away…
A Guinness record holder was building… wait for it… houses of cards.
“The same exact week that Jim Rickards plans to unveil his “House of Cards” theory to an intimate audience,” Matt said, “right down the friggin’ street the Guinness world record-holding card stacker is making human-sized replicas of the Capitol Building, Washington Monument and Baltimore Skyline.”
Needless to say, we feel like Jim Carrey in the movie 23.
Instead of 23s, though, cards fashioned into buildings have invaded our lives.
Are these serendipitous encounters an omen? A warning? A ‘sign of the times’?
We’re not sure. But given the state of the world, we have little motivation for risk these days.
Lucky for us (and you too, if you so choose), Jim Rickards is at our side. And today, Jim and a whole lineup of speakers will help guide us to safety. Before it’s too late.
In fact, speaking of, I have to head out. The symposium kicks off in less than an hour. And all the way across Baltimore at the Four Seasons.
I’ll let investment guru Benjamin Graham tell a quick story while I take the commute…
Talk to you in a moment.
“Imagine you are entering a deluxe, well-appointed casino,” Benjamin Graham writes in his book The Intelligent Investor.
“Off the lavish entry foyer, there are two ample gambling wings, one hued in reds, the other in muted greens. The red wing looks enticing, but if I may insist, let’s first enter the less crowded green rooms to watch the action.
“The atmosphere is unhurried, the blackjack tables are sparsely attended, and every player sits behind a mound of green and black chips. You think at first you’ve come to the wrong place. You see the ordinary table limits, the ordinary clothes, the ordinary games. But then how did these ordinary people get such piles of money?
“Then it comes to you. They’re all winning.
“In fact, as you walk around the green wing, you hardly can find a losing player. You know, of course, that the average house take on table games is 5%, but as you count winning and losing hands, you realize these players are getting a better break. They seem to be gaining at a rate of 60% to 40%. You start fresh and take another count. The results are the same.
“A pit boss appears at your shoulder. ‘Excuse me,’ you say, ‘but can this be right? The odds favor the players?’
“‘Yes, indeed. The odds in the green room usually run 60 to 40. It’s been that way since we opened.’
“‘But… most of the players must go away winners.’
“‘They sure do. At those odds, we calculate that 9,999 out of 10,000 make money. At our high-stakes tables in the back, they do even better, with winners running about 20,000 to 1. It’s a good thing we get so few players, or they’d break the house.’
“Somewhat amazed, you thank him and shake your head. There’s no time to lose, you decide, but you’ll need more than the few dollars you have in your pocket. You hatch a plan to gather your life savings, come back to the casino, and win the bundle you’ve been dreaming of.
“On your way out, you glance into the red wing. The action level is much, much higher. The room is crowded and fairly roars with excitement. Can it be even better here, you wonder? Curious, you go in. Players bet multiple table positions, wave frantically for change, entreat the gods for luck.
“You see few green and black chips, fewer winning players. The piles of chips in front of them are dwindling with each hand. In fact, the odds are worse than normal. Again, you start to count. Although the players continue to excitedly toss in their chips, the odds appear to be maybe 60 to 40 in favor of the house. Once more, your curiosity whetted, you walk over to a pit boss and ask her the odds at these tables.
“She tells you what you suspected. They are 60 to 40 in favor of the casino. Warming up to the subject, she chuckles and says, “This room coins gold for the casino, the chances are 9,999 in 10,000 rounds that we wind up winners.” You don’t have to be a genius to see that this is obviously not the place you want to be.
“You go home and get your stash. You return to the casino with your fistful of money, excited, eager for action, all the time figuring how you’ll do even better at the game. But then a strange thing happens.
“You walk into the red wing and start to play.”
[Ed. note: Sound familiar? Don’t worry. Everyone’s been there. It’s a rite of passage. It’s good for you. It makes you shrewd. That way, next time, you’ll keep your money in the muted green room. For example, here’s an investment worthy of the green room .]
All right. I’m here. I made it to the Four Seasons…
The story Mr. Graham just told, you may’ve noticed, fits neatly into the week’s dominant theme: self-sabotage.
Today, with the help of Dave Gonigam, we’ll show you precisely how you’re sabotaging your investment success… and three instantly-actionable ways to quit getting in your own way.
We’ll set the stage for Dave in one moment.
First, though, the symposium is beginning.
The Capital Markets House of Cards Symposium has just kicked off. And Addison Wiggin has taken the stage.
Which begs the question…
Have you checked in for “Virtual Access” yet?
We’ll let Jim Rickards explain what this symposium is all about:
“I believe our financial system is in a dangerous position. Everything that made 2008 a nightmare is worse today.
“It’s important you understand the problem and then take concrete actions to protect your wealth. All of my colleagues will have specific proposals for those in attendance to help protect and grow their wealth.
“Attendees will learn what we believe are the most ominous trends for the global monetary system… the safest assets to protect their wealth… and the surest way to make a fortune after the “House of Cards” collapses.
That said, here’s the agenda…
(Click here to gain insider access and listen to every word of the symposium.)
“I plan on saying things I’ve never told an audience before,” Rickards goes on. “Attendees will also learn how we think the collapse will unfold… and what action steps they must take now. In fact, they paid more than $6,500 to join the highest rank of readership and come here.
“But don’t be disappointed if you can’t make it. You can listen to every word that’s said at a discount — but not for much longer. When you claim your insider access to this meeting, you’ll receive the recordings of everything that’s said as well as the full transcripts — you won’t want to miss it. Click here to claim your insider access before the price goes up again.”
OK. I’m going to listen in on what the speakers have to say. I’ll have a full report for you tomorrow.
Now, let’s pass the mic to Dave Gonigam. He’s joined us today to show you three instantly-actionable ways to stop sabotaging your retirement.
Right after this short break…
“You’ve heard the old expression “Buy low, sell high,” right?” Dave asks.
“It’s easier said than done.
“Many baby boomers piled into stocks in the late 1990s, when it seemed as if stocks would go up forever. Then stocks tumbled in the early 2000s. Boomers bailed and took losses.
“When stocks recovered in the mid-2000s, many boomers got back in. Then they got crushed in 2008. The boomers bailed again and took losses again.
“Certain they learned their lesson once and for all, they stayed out of the market — even as the S&P 500 index tripled from 2009-14.
“Does this sound like anyone you know?
“I’m not describing something hypothetical here. This is what people do.
“Maybe it’s the herd instinct,” Dave wonders. “Maybe there’s something screwy in the wiring of our brains.
“Whatever it is, it makes us buy high when everyone else is euphoric… and sell low when everyone else is on the verge of slitting their wrists.
“A boatload of statistical evidence backs me up. The asset management firm BlackRock studied the average investor’s performance across a 20-year span. As you see nearby, that performance was abysmal — underperforming every major asset class.
“Nor is that research an outlier. Richard Bernstein of Richard Bernstein Advisors did his own 20-year study. ‘The performance of the typical investor over this time period is shockingly poor,’ he wrote.
“Bernstein looked at the years 1992-2013. During those two decades, you could have been in an S&P 500 index fund and gained an average 9.3% each year. You’d have started with $10,000 in 1993 and ended with $55,916 in 2013. That’s a period including the dot-com bust of 2000-02 and the Great Recession of 2007-09.
“But his research shows the average investor starting with $10,000… and ending up with only $16,386. Yuck. All because of buying high and selling low.
“‘Doing the wrong thing at the wrong time is killing you,’ says John Bogle, the 85-year-old founder of the fund giant Vanguard.
“‘We have a business where everyone thinks you have to do something,” Bogle tells Bloomberg News, ‘not realizing that every time you do something you’re likely doing something that is going to cost you too much, or is an emotional response that won’t serve your long-term goals.’
“If you’ve been reading my Laissez Faire Letter articles since last fall,” Dave goes on, “you know about the benefits of ditching high-cost actively managed mutual funds in favor of exchange-traded funds that passively track a stock index.
“But that guidance won’t do you any good if you panic out of your ETFs and into cash every time the market drops a little bit.
“I know, easier said than done. But over the long haul, you’ll come out ahead.”
As David Rosenberg, former chief economist at Merrill Lynch says: “Corrections are part and parcel of the investment process. They come and go, and it is imperative to take a deep breath and realize that what is important for building wealth is not ‘timing’ the market but rather ‘time in’ the market.
“You can’t not invest now,” adds John Bogle. “Choose to not invest and you are ensuring you will have nothing 40, 50 years from now.”
What if you don’t have 40-50 years? What if you’re worried that the stock market will plummet again like in 2000 and 2008?
“I hear you,” says Dave.
“We’ll talk more about that in future articles and special reports. In the meantime, here are three things to do. Or not to do…
ONE: “Don’t chase “hot sectors” of the market with money you can’t afford to lose. Biotech is on fire right now, you say? It’s been on fire for two years. Maybe it’ll stay that way another two years… or maybe it’ll tank starting tomorrow. You don’t know. Don’t take the chance.
TWO: “Remember the chart on this page. All you have to do is sit tight in an S&P 500 index fund and you’ll nearly quadruple the average investor’s performance!
THREE: “Stay far away from financial TV. It feeds your lizard brain with wall-to-wall chatter about whether now’s the time to buy this or sell that. It’s an easy way to fill endless airtime. And it makes the financial channels’ broker advertisers very happy. The more you buy and sell, the more money they make.
“Really, half the battle for your retirement is to keep as much money as possible in your hands and away from Wall Street’s grubby paws. And you’re already mastering that.
“Now you know the other half is to keep your cool. We’ll talk more about strategies to help you do just that in the months ahead.”
[Ed. note: In the meantime, don’t miss out on the “House of Cards” digital access. A few of your fellow LFT readers paid $6,500 to attend this event. They get the real deal. But that doesn’t mean you’re shut out. You can still gain insider access from the comfort of your own home. Hurry before the price jumps again: Click here for all the details.]
Managing editor, Laissez Faire Today
P.S. Have something to say? Say it! Chris@lfb.org