3 Applicable Rules of Wealth

Here are three Golden Rules of Investing that are particularly applicable now.

Some of the biggest investment opportunities I have seen in 50 years have been and are brewing.  Brexit has leveraged these opportunities, making the potential for profit truly exciting.  However this same leverage could ruin most investors because they ignore the Three Golden Rules of Investing below.

Here are the Three Golden Rules:

#1: Markets move short term based on emotion and are unpredictable.  Markets move long term based on value and are predictable.

#2: Do not panic. Turn on the auto pilot and normally add to your position.

#3: Know that a period of high returns will be followed by a period of low returns and vice versa.

Brexit has created panic in the market causing unpredictable short term currency distortions such as strengthening of the US dollar and weakening of the British pound.  Both are well outside their predictable value range, so long term investments in these distortions make really good sense.

In the last 18 months, I have issued  three reports, each made a specific speculation recommendation.  We can look at these three ideas to see  how to spice a conservative portfolio with value speculations in distortions of this type.

One report “The Silver Dip 2015 and 2016”  showed how (and why) to invest in the Silver ETF SLV and how to leverage the investment with British pound margin loans.  Brexit accelerated the profit in this position.  There are compelling reasons to take a 60% + profit that has been earned in the last 6 months!

When Britain opted to exit the European Union, the British pound dropped to $1.36 dollars per pound in its largest one day drop in history.  The price of silver spiked.  The pound has continued to drop and silver has continued to rise.

This chart from www.finance.yahoo.com shows the pounds fall this year.

finance.yahoo.com chart

This  www.finance.yahoo.com shows silver’s rise.

finance.yahoo.com chart

Brexit has also increased the potential of the other two speculations explained in my reports.

Speculation #2 is to invest in European shares and leverage the investment with US dollars.

Speculation #3: is to overweight the percentage of investments in Chinese shares in your portfolio and leverage the investments with US dollar margin loans.

wsj chart

The Wall Street Journal article “Brexit Is Helping China Push Down the Yuan” (1) helps explain why Chinese shares offer excellent potential now.

The Brexit vote on June 23 upended global markets, sending the U.S. dollar soaring and a host of other currencies tumbling.  It is also helping the Chinese yuan depreciate—as many economists say it needs to do, given the country’s economic slowdown—without sparking the panic and capital outflows that accompanied two recent rounds of weakening.

The People’s Bank of China, which controls the value of China’s currency by setting a daily trading range in mainland markets, has allowed the yuan to weaken 1.6% against the dollar in the two weeks following Brexit.  That has made the yuan Asia’s worst-performing currency post-Brexit, and compares with a 1.9% drop versus the dollar in the first week of January, and a 3% depreciation over a two-day period last August.

While those earlier bouts of rapid yuan depreciation sent domestic markets tumbling and led to a surge in money fleeing the country. This time, Chinese stock and bond markets have held up well.

Still, China has many incentives to keep the yuan from falling too fast for too long.  A much weaker yuan could spark resentment from trading partners ahead of a September gathering of Group-of-20 leaders in China.  It also chips away at Chinese consumers’ buying power, potentially hurting the country’s effort to make its economy driven more by consumption.

British and German shares were already good value at the beginning of 2016.  iShares German and British shares ETFs should have already been in value oriented portfolios.  The panic has pushed the shares of these ETFs down as the charts below show.  This means that these markets offer even greater value.

finance.yahoo chart

iShares UK ETF share chart (EWU)

finance.yahoo chart

iShares German ETF share chart (EWG)

Most investors have ignore rule #2 and have panicked. This increases the potential for those of us who see stampedes as opportunities rather than problems. We know that these periods of poor performance will be followed by periods of high performance.

Always invest in diversified value.  At times, speculate in panic induced extra value.  Brexit has created that panic now.


(1) www.wsj.com/articles/yuan depreciation gets brexit push

We’ll look at how to gain value through diversification and how to add spice by speculating panic induced extra value at our International Club retreat.

“If I Live Long Enough, I’ll Really Cash In Next Time”

Periods of good investing performance are always followed by periods that are bad.

Think about this…

The US dollar has risen over 50% above its lows of 2011.   The greenback is at its highest level versus the Chinese yuan since 2008.  India’s rupee is at an all-time low against the buck.  Other Asian currencies, the Singapore dollar and Malaysian ringgit have plunged to depths not seen since the financial crisis of 1997-98.  The euro, Mexican peso and Canadian dollar have crashed.  In other words, the US dollar is in a period of high performance.

What happens is the greenback is in a free fall.  Smart investors can cash in huge profits.

Yet there is a bigger economic problem that can ruin the purchasing power of your cash faster than you can imagine.

While the dollar was rising non US governments and businesses accumulated almost ten trillion dollars of debt denominated in US dollars.

The terror in this debt is that it acts as a destructive and very rapid financial amplifier.  Dollar debt is like a short position.  When the dollar rises, borrowers scramble to short-cover their position by selling their own currency.  This defeats the purpose of their hedging as it increases the strength of the dollar.  So they short even more.  Those short sales create an upward dollar spiral.  The buck rises higher and higher, based entirely on fear and speculation.

When that leverage energy is spent the currency stalls and plummets out of control… like now.

The last time we saw such a upwards spiral was from 1980 to 1985.  The dollar rose 50% in those five years.

Guess what?

Then it collapsed 50% in just two years.

The US dollar is in a similar position as at the beginning of Ronald Reagan’s first term in the 1970s.  This was a time of widening budget deficits, rising interest rates and a US dollar surge.  This created a problem then, as it does now, and creates huge opportunity for those in the know.

The rise of the dollar, the debt and the US stock market creates an especially dangerous conflict because Donald Trump wants to balance America’s trade.  A stronger dollar makes this impossible because it pushes up the cost of US material, US labor and US exports.

The overpriced dollar, the poor value of the US stock market (compared to other markets) create a dollar crisis and a special opportunity for you and me as investors.

“If I Live Long Enough, I’ll really cash in next time”.    I made this promise to myself in the 1980s.   A remarkable set of economic circumstances helped anyone who spotted them become remarkably rich.  Some of my readers made enough to retire.  Others picked up 50% currency gains.  I invested as much as I could handle then as the profits rolled in for about 17 years.  I had wished I could have invested more.

Now those circumstances are here again.

And I have…

invested more… a lot more… betting again the dollar.

The swollen stock market prices, huge dollar denominated debt and weakening dollar are three patterns that can create a fast 50% profit.

This is the most exciting opportunity I have seen since we started sending our reports on international investing ideas more than three decades ago.  The trends are so clear that I created a short, but powerful report “Three Currency Patterns For 50% Profits or More.”   This report shows how to earn an extra 50% from currency shifts with even small investments.

There is a way to accumulate good value equities denominated in the following currencies of special strength, including the Euro, Canadian dollar, Singapore dollar, British pound, New Taiwan dollar and Chinese yuan.

The report reveals 21 special non dollar equities that have the greatest opportunity for safety and appreciation.

I kept the report short and simple, but include links to 153 pages of global stock market and asset allocation analysis so you can keep this as simple or as complex as you desire.

The report shows 22 good value investments and a really powerful tactic to use that allows you to inexpensively accumulate these bargains now even in very small amounts (even $5,000).  There is extra profit potential of at least 50% so the report is worth a lot.

Research shows that most people worry about having enough money if they live long enough.   I never thought of that.   I just wanted to live long enough to see the remarkable economic opportunity that started in 1980 come again so I could hit the jackpot.  This powerful profit wave has begun.  I have made the investment myself  suggest you investigate this in my report “Three Currency Patterns For 50% Profits or More.”

Order the report here $29.95

My Guarantee

Order now and I’ll email the online report “Three Currency Patterns For 50% Profits or More” in a .pdf  file right away. 

I guarantee you’ll learn ideas about investing that are unique and can reduce stress as they help you enhance your profits through slow, worry free purposeful investing.  If you are not totally happy, simply let me know within 60 days and I’ll refund your subscription fee in full, no questions asked.

You can keep the report “Three Currency Patterns for 50% Profits or More”  as my thanks for trying.

You have nothing to lose except the fear.   You gain the ultimate form of financial security as you reduce risk and increase profit potential.

Order the report here $29.95

Or get this report free.  Subscribe to the Purposeful Investing Course (Pi) described below.