There’s a time for everything. The time to get into stocks is when prices are low, not when they are high. This is not exactly advanced geophysics, but when they are at epic lows there is more upside.
Time marches on and nearly every things change. It has always been that way. In physics there is a term entropy " It represents the natural tendency of systems to move from ordered to disordered states" and the term, a case could be made applies to the stock markets. John Prine had a lyric that could apply to markets as well - "Did you every notice when your feeling really good, there is always a pigeon who will shit on your hood.
In my case when I got started in investing was when IRA's had just come out. It seemed it was going to be easy you find someone who tells you they know what they are doing, and since you don't you buy the Kool-Aid. It took me 3 years to find out paying 8.5% to IDS as a management commission to consistently lose me money. The 4th year I woke up. At my meeting that year I was advised stick in it for the long haul, I replied I was going to do better for sure the next year by myself. The response was how are you going to do that? I stated I simply was going to quit paying someone to lose my money and I would for sure be 8.5% ahead. I was in my 20's then and I am 68 now and along the way age has something to do with wisdom. Never to old to learn something new.
No one will watch your money like you will. The fix was I needed to get smarter and learned something & I joined AAII the American Association of Individual Investors, I read Peter Lynch the famous fidelity manager, I read John Bogle the head of Vanguard, and by continuing to read and educate my self on what was happening one got a bit of an education. Further down the road I heard about George Soros, Warren Buffet, Ray Dalio, John Templeton, Carl Icahn and eventually this fellow Bill Bonner and his team including Tom Dyson. I like Tom he is bright, interesting, he is straight forward on what he doesn't know and if in a quandary he admits it.
I don't believe there is one simple answer but when you look at what works for others you can start to develop a plan and my thoughts are you will be able to start to filter out the noise. Don't put all of your eggs in a single basket. Just about every bodies theory works sometime and most likely know ones works all of the time.
Lastly my advice to anyone reading is quite simply ask questions and "If your in a room and your the brightest one in the room you need to realize that your in the wrong room."
I have worked for myself most of my life in industry in a finishing plant that does metal plating. There is no school or university you can go to to learn the trade therefore 80% + of most facilities are family run. What I have learned over all of the years is don't be afraid to try something new and also never waste a mistake. Mistakes educate you & point out what doesn't work and guide you to try something else that perhaps will!
I will make a case for many here by reading the American Association of individual investors it is a great place to meet like minded folks who are all trying to put together what we are trying to do here. You can run ideas by one another and often learn something in the process. They may challenge your thoughts and you may come away a bit smarter and or avoid making a mistake someone already has. Looking at other perspectives has should help you understand yours better and may even change your mind!
Enjoyed your comment. Bringing entropy into it got me thinking about some of the other classical ideas that I've learned about from Bill & Joel Bowman etc. (With a bit of help from ChatGPT to order my thoughts)
Heraclitus, Jung’s enantiodromia, the Greek idea of hamartia, and the scientific concept of entropy. Put together, they form a remarkably consistent view of how systems, people, and societies rise and fall.
Heraclitus argued that everything is in flux and that things are always in the process of becoming their opposite. Jung, two and a half thousand years later, called a similar phenomenon enantiodromia: when something is pushed to an extreme, it produces its opposite. The Greeks captured the same pattern in tragedy through hamartia, the fatal flaw, where the hero is not destroyed by his weakness but by his greatest strength taken too far. Entropy then sits underneath all of this as the background law: order decays over time unless energy and effort are constantly applied to maintain it.
Put together, these ideas suggest that failure rarely comes from simple weakness. More often, it comes from success, strength, or efficiency taken too far and left unchecked. The qualities that make a person, company, or empire successful are the very qualities that, when overextended, create fragility.
Discipline becomes rigidity.
Confidence becomes arrogance.
Efficiency becomes brittleness.
Security becomes complacency.
Expansion becomes overreach.
In each case, the system does not collapse because it was weak, but because its strengths were pushed beyond the point where they were stabilising and started to become destabilising, while entropy quietly did its work in the background.
This is why history often looks less like a straight line of progress and more like a pendulum. Periods of peace create complacency, which invites conflict. Periods of conflict create exhaustion, which leads to peace. Periods of freedom create disorder, which leads to demands for control. Periods of control create resentment, which leads to demands for freedom. The road up and the road down are, as Heraclitus said, the same road.
If there is a practical lesson in all of this, it is probably this: when something is working very well, that is precisely the moment to start asking how it might fail. Because the seeds of the next reversal are usually contained in the current success. And the longer something has been pushed in one direction, the more violently it tends to swing back the other way.
Great write up Jon. I'm the same age and had the same experience, only I got a Duke U. MBA first. They taught me a variety of things, but nothing about investing to make money long-term. I started reading Bill's Daily Reckoning from about the first e-letter. Gold Up, Dollar Down days ended up being much more valuable three decades later than even he thought! Hoping to pass down 4 decades of investment knowledge to my adult kids. -Phil
Thanks for the comment Phil. A few more thoughts below.
I was a pre-veterinary student and managed a BA from Luther college in Decorah Iowa but the lure of Alaska had bitten me so I did not finish going to veterinary school. There I worked construction and had just missed the oil boom and caught the 1st bust. i kidded my father years later about that college degree. In 1975-79 it was go to college be a Dr. or attorney you need the education. interest rates were only 2.5-3% on govt loans. Took 10 years or me to pay back. My friend in Alaska who was a carpenter by trade self taught worked the slope in AK for 3 years and accumulated enough cash to build and pay for a $250000.00 home cash. You and i know our generation slaved away for 30 years to repeat the feat. Oils fields today can do the same thing for young folks as I watched the Williston Basin explode. I have a daughter and son who has a fiancée now who both are stuck in student loan debt. the dream & noose around their neck for them is pay the loan for 30 years and the rest will be forgiven. That is sad should be buying a home.
Phil i do not believe that our high school system really prepares one for life either and college marginally better, especially when you look at the cost return basis. Where have you ever been taught the art of negotiating? School does not prepare you for that - yet if your going into business you will need to learn it and learn it very fast. I stress to my kids and grand kids you need to be strong in two areas and you will be ok one is reading and the other is math and have a never quit attitude. With those to strong backgrounds even if you can't afford to go to 2ndary school you can educate your self in the modern world on your own. I am an avid reader as I am inquisitive by nature.
Have pointed a few young folks in the direction of the trades. unless you want to be an engineer, Dr, or attorney or something similar the trades are a far better cost to income ratio. 2years you can become an electrician or a plumber and start at union wages and only have minimal debt plus most of those outfits have pensions. When I was young the thought often was your only a truck driver. Today you can go to 3.5 months of school and get a cdl and start on a $60000.00 minimum salary driving locally and $90,000.00 to $110000.00 if willing to go over the road. You will only have invested about $3000 to get trained. Much easier to pay off $3000 than $125000.00 or more in private school for 4 year or $250000.00 + in ivy league to come out in the case of the former with the same rate of pay or the latter equivalent. College educations have far exceeded the national rate and it is a dame shame for the return has not warranted it. Ai will only exacerbate the issue for many current college trained jobs.
Hmmm.......does it always go on as it was before? At one point America was the engine for the World. It isn't any more. But, then, the U.S. was the safe haven for the World. Stock market, currency, and land were always safe havens even if your stock picks went south. But today, the world it is a-changin' as Bobby Dylan lamented. The U.S. isn't the safe haven and most country are beginning to see that. The Empire is no more and even our neighbors to the north and south are finding the U.S. unfriendly. Where does this lead as the US$ does not have the hegemony anymore? And, our government seems to focus more on international concerns and less on the U.S. economy and jobs here in the U.S. As ol' Bill said - "That’s what we’re going to find out."
BILL we had this conversation about 50 years ago in DC when youth was on our side and we thought we could change the world .. the consensus was that if you worked hard and saved by spending less than you earned, you'd improve your financial position in society .. stocks in those days (post WW2) we're seen as just a supplementary way of selective gambling some of your savings in companies that where producing goods that worked, and folks would pay for them. So washing machines dryers fridges cars home goods etc all got made in the USA and as a nation we prospered. But that shifted in the latter half of 1950's when Playboy (and others) sexualised women AS objects and Men for the ownership of their Objects (cars homes boats toys etc) and off we went to Lala land with only one objective. Instead of working hard and producing good products, we started to live life primarily for PROFIT at all costs ie gambling whether in VEGAS or anywhere, and Booze Broads Bullets became the US mantra. Do what ever you have too, (least possible) to make a buck and to hell with everyone else. Yep so now we can enjoy the results of all those excesses that we pursued .. and the Rot has grown from within so that no other country needs to attack the US, as thy are doing a terrific job at destroying themselves from within .. that why we live in other parts of the world right?
The "time (has been) running out on stocks" ever since I first subscribed here; early 2021, IIRC.
Sure it is. And the sun's gonna burn out in four or five billion years, too; give or take a billion...and looking about as precise as this BPR "time running out on stocks" call.
So stocks do better some times and worse at other times. Is there some logic to those times? America has been on a stock run recently but even more recently so has gold. Is there a logical approach as to why stocks and gold have had nice runs? BPR presents some thoughts on what causes these ups and downs and certainly Tom's timing seems pretty damn good, short term. Being an established American I'm not moving to somewhere else to take my chances or to learn. In my estimation the information flow is better in America than anywhere else and I lived in Europe for 4 years. I'm betting on the good ole USA and I suspect although debt is getting worse, in my opinion that is a strong negative. But at the same time I suspect American society has tried a lot of extraordinary ideas and learned a lot. They may have even learned that war is pervasively negative but strength isn't the same as war. I'm optimistic that America will do better and I may still, better my position.
Bill this reads like a "filler" though it is true and has been the experience of most of your readers who were young once and thought the market was a good idea.
Time marches on and nearly every things change. It has always been that way. In physics there is a term entropy " It represents the natural tendency of systems to move from ordered to disordered states" and the term, a case could be made applies to the stock markets. John Prine had a lyric that could apply to markets as well - "Did you every notice when your feeling really good, there is always a pigeon who will shit on your hood.
In my case when I got started in investing was when IRA's had just come out. It seemed it was going to be easy you find someone who tells you they know what they are doing, and since you don't you buy the Kool-Aid. It took me 3 years to find out paying 8.5% to IDS as a management commission to consistently lose me money. The 4th year I woke up. At my meeting that year I was advised stick in it for the long haul, I replied I was going to do better for sure the next year by myself. The response was how are you going to do that? I stated I simply was going to quit paying someone to lose my money and I would for sure be 8.5% ahead. I was in my 20's then and I am 68 now and along the way age has something to do with wisdom. Never to old to learn something new.
No one will watch your money like you will. The fix was I needed to get smarter and learned something & I joined AAII the American Association of Individual Investors, I read Peter Lynch the famous fidelity manager, I read John Bogle the head of Vanguard, and by continuing to read and educate my self on what was happening one got a bit of an education. Further down the road I heard about George Soros, Warren Buffet, Ray Dalio, John Templeton, Carl Icahn and eventually this fellow Bill Bonner and his team including Tom Dyson. I like Tom he is bright, interesting, he is straight forward on what he doesn't know and if in a quandary he admits it.
I don't believe there is one simple answer but when you look at what works for others you can start to develop a plan and my thoughts are you will be able to start to filter out the noise. Don't put all of your eggs in a single basket. Just about every bodies theory works sometime and most likely know ones works all of the time.
Lastly my advice to anyone reading is quite simply ask questions and "If your in a room and your the brightest one in the room you need to realize that your in the wrong room."
I have worked for myself most of my life in industry in a finishing plant that does metal plating. There is no school or university you can go to to learn the trade therefore 80% + of most facilities are family run. What I have learned over all of the years is don't be afraid to try something new and also never waste a mistake. Mistakes educate you & point out what doesn't work and guide you to try something else that perhaps will!
I will make a case for many here by reading the American Association of individual investors it is a great place to meet like minded folks who are all trying to put together what we are trying to do here. You can run ideas by one another and often learn something in the process. They may challenge your thoughts and you may come away a bit smarter and or avoid making a mistake someone already has. Looking at other perspectives has should help you understand yours better and may even change your mind!
Enjoyed your comment. Bringing entropy into it got me thinking about some of the other classical ideas that I've learned about from Bill & Joel Bowman etc. (With a bit of help from ChatGPT to order my thoughts)
Heraclitus, Jung’s enantiodromia, the Greek idea of hamartia, and the scientific concept of entropy. Put together, they form a remarkably consistent view of how systems, people, and societies rise and fall.
Heraclitus argued that everything is in flux and that things are always in the process of becoming their opposite. Jung, two and a half thousand years later, called a similar phenomenon enantiodromia: when something is pushed to an extreme, it produces its opposite. The Greeks captured the same pattern in tragedy through hamartia, the fatal flaw, where the hero is not destroyed by his weakness but by his greatest strength taken too far. Entropy then sits underneath all of this as the background law: order decays over time unless energy and effort are constantly applied to maintain it.
Put together, these ideas suggest that failure rarely comes from simple weakness. More often, it comes from success, strength, or efficiency taken too far and left unchecked. The qualities that make a person, company, or empire successful are the very qualities that, when overextended, create fragility.
Discipline becomes rigidity.
Confidence becomes arrogance.
Efficiency becomes brittleness.
Security becomes complacency.
Expansion becomes overreach.
In each case, the system does not collapse because it was weak, but because its strengths were pushed beyond the point where they were stabilising and started to become destabilising, while entropy quietly did its work in the background.
This is why history often looks less like a straight line of progress and more like a pendulum. Periods of peace create complacency, which invites conflict. Periods of conflict create exhaustion, which leads to peace. Periods of freedom create disorder, which leads to demands for control. Periods of control create resentment, which leads to demands for freedom. The road up and the road down are, as Heraclitus said, the same road.
If there is a practical lesson in all of this, it is probably this: when something is working very well, that is precisely the moment to start asking how it might fail. Because the seeds of the next reversal are usually contained in the current success. And the longer something has been pushed in one direction, the more violently it tends to swing back the other way.
Great write up Jon. I'm the same age and had the same experience, only I got a Duke U. MBA first. They taught me a variety of things, but nothing about investing to make money long-term. I started reading Bill's Daily Reckoning from about the first e-letter. Gold Up, Dollar Down days ended up being much more valuable three decades later than even he thought! Hoping to pass down 4 decades of investment knowledge to my adult kids. -Phil
Thanks for the comment Phil. A few more thoughts below.
I was a pre-veterinary student and managed a BA from Luther college in Decorah Iowa but the lure of Alaska had bitten me so I did not finish going to veterinary school. There I worked construction and had just missed the oil boom and caught the 1st bust. i kidded my father years later about that college degree. In 1975-79 it was go to college be a Dr. or attorney you need the education. interest rates were only 2.5-3% on govt loans. Took 10 years or me to pay back. My friend in Alaska who was a carpenter by trade self taught worked the slope in AK for 3 years and accumulated enough cash to build and pay for a $250000.00 home cash. You and i know our generation slaved away for 30 years to repeat the feat. Oils fields today can do the same thing for young folks as I watched the Williston Basin explode. I have a daughter and son who has a fiancée now who both are stuck in student loan debt. the dream & noose around their neck for them is pay the loan for 30 years and the rest will be forgiven. That is sad should be buying a home.
Phil i do not believe that our high school system really prepares one for life either and college marginally better, especially when you look at the cost return basis. Where have you ever been taught the art of negotiating? School does not prepare you for that - yet if your going into business you will need to learn it and learn it very fast. I stress to my kids and grand kids you need to be strong in two areas and you will be ok one is reading and the other is math and have a never quit attitude. With those to strong backgrounds even if you can't afford to go to 2ndary school you can educate your self in the modern world on your own. I am an avid reader as I am inquisitive by nature.
Have pointed a few young folks in the direction of the trades. unless you want to be an engineer, Dr, or attorney or something similar the trades are a far better cost to income ratio. 2years you can become an electrician or a plumber and start at union wages and only have minimal debt plus most of those outfits have pensions. When I was young the thought often was your only a truck driver. Today you can go to 3.5 months of school and get a cdl and start on a $60000.00 minimum salary driving locally and $90,000.00 to $110000.00 if willing to go over the road. You will only have invested about $3000 to get trained. Much easier to pay off $3000 than $125000.00 or more in private school for 4 year or $250000.00 + in ivy league to come out in the case of the former with the same rate of pay or the latter equivalent. College educations have far exceeded the national rate and it is a dame shame for the return has not warranted it. Ai will only exacerbate the issue for many current college trained jobs.
Hmmm.......does it always go on as it was before? At one point America was the engine for the World. It isn't any more. But, then, the U.S. was the safe haven for the World. Stock market, currency, and land were always safe havens even if your stock picks went south. But today, the world it is a-changin' as Bobby Dylan lamented. The U.S. isn't the safe haven and most country are beginning to see that. The Empire is no more and even our neighbors to the north and south are finding the U.S. unfriendly. Where does this lead as the US$ does not have the hegemony anymore? And, our government seems to focus more on international concerns and less on the U.S. economy and jobs here in the U.S. As ol' Bill said - "That’s what we’re going to find out."
It is the theme that most of us bought into - always worth repeating. And as a bonus, no politics.
I very much appreciate the BPR politics. The ill-willed, uncivil, time-wasting political comments...
Playing the market requires diligence.
Mr. Bonner it seems assumes his readers merely pick a stock, dump money into it and pray.
-
I believe most of us first study the charts, weight the P/E, compare past performance, review the company fundamentals... then pray.
What is the result of we reinvest the dividends?
BILL we had this conversation about 50 years ago in DC when youth was on our side and we thought we could change the world .. the consensus was that if you worked hard and saved by spending less than you earned, you'd improve your financial position in society .. stocks in those days (post WW2) we're seen as just a supplementary way of selective gambling some of your savings in companies that where producing goods that worked, and folks would pay for them. So washing machines dryers fridges cars home goods etc all got made in the USA and as a nation we prospered. But that shifted in the latter half of 1950's when Playboy (and others) sexualised women AS objects and Men for the ownership of their Objects (cars homes boats toys etc) and off we went to Lala land with only one objective. Instead of working hard and producing good products, we started to live life primarily for PROFIT at all costs ie gambling whether in VEGAS or anywhere, and Booze Broads Bullets became the US mantra. Do what ever you have too, (least possible) to make a buck and to hell with everyone else. Yep so now we can enjoy the results of all those excesses that we pursued .. and the Rot has grown from within so that no other country needs to attack the US, as thy are doing a terrific job at destroying themselves from within .. that why we live in other parts of the world right?
The "time (has been) running out on stocks" ever since I first subscribed here; early 2021, IIRC.
Sure it is. And the sun's gonna burn out in four or five billion years, too; give or take a billion...and looking about as precise as this BPR "time running out on stocks" call.
So stocks do better some times and worse at other times. Is there some logic to those times? America has been on a stock run recently but even more recently so has gold. Is there a logical approach as to why stocks and gold have had nice runs? BPR presents some thoughts on what causes these ups and downs and certainly Tom's timing seems pretty damn good, short term. Being an established American I'm not moving to somewhere else to take my chances or to learn. In my estimation the information flow is better in America than anywhere else and I lived in Europe for 4 years. I'm betting on the good ole USA and I suspect although debt is getting worse, in my opinion that is a strong negative. But at the same time I suspect American society has tried a lot of extraordinary ideas and learned a lot. They may have even learned that war is pervasively negative but strength isn't the same as war. I'm optimistic that America will do better and I may still, better my position.
Bill this reads like a "filler" though it is true and has been the experience of most of your readers who were young once and thought the market was a good idea.