Not long ago, my 9-year-old son asked me what the phrase “two sides of the same sword” meant. He already sort of reasoned it all out. But then again, the closest thing in our household to a sword is my dad’s old hunting knife (and even that has only one cutting edge). In short, he was looking for a more formal explanation.
It seems to me that the biggest challenges of our time, like maintaining our power as individuals, holding on to our last vestiges of privacy and dealing with a world in rapid digital transition … are likewise “two sides of the same sword.”
One represents change (some of which is threatening, even hazardous to us and our wealth). The other represents opportunity — which is why we are excited about hiring our newest guru, Paul .
If you missed yesterday’s interview introducing Paul, click here for all the details. But I wanted to spend a few minutes today highlighting his investment philosophy and views on subjects such as gold, which is near and dear to our hearts here at The Sovereign Society…
JL: Paul, you’ll be writing about disruptive technologies, new trends and new investment opportunities. Why are those important? What do you want Sovereign Society members to take from your discussions?
Paul: I’ll give you an example, JL. Between 1870 and 1940, you had a period of unprecedented change. Every person in this country experienced something that he or she would have considered miraculous even 50 years before.
Think about it. Electric lights replaced candles and lamps that burned whale oil. Toilets and indoor water taps replaced outhouses and hand-powered water pumps. Trains, cars and trucks replaced horses and pack animals. People forget that in the New York City of the 1800s, the streets were covered with horse manure because of the tens of thousands of horses pulling the city’s wagons, coaches and buses!
So, why bring this up to you now? New technologies transformed life in the United States. Our lives extend into the night because of electricity and light. Trash pick-up, sewage treatment and clean water now mean people don’t die by the thousands from typhoid, tuberculosis and other “filth diseases.” Nor do we have to walk or ride a horse for miles in order to get some place.
Now imagine the next step: A world where self-driving vehicles take us where we want. Self-driving trucks and drones deliver things to us. Personalized medicine makes sure we get the right medicine at the right dose. Artificial intelligence, big data and genomics make sure medical diagnoses and medical treatments are correct.
That’s the future for our children and their sons and daughters in the decades to come. Let me put it this way: In 1900, every household, grocery and restaurant had an “icebox” (if they could afford it) — supplied by a horse-drawn ice delivery wagon. Today, our refrigerators deliver ice, automatically, right into our cups, at the push of a button for fractions of a cent.
Long story short, a revolution is coming to human life. This revolution is going to generate huge investment opportunities for making money — for people who understand what companies are going to benefit, and what stocks to buy. The companies at the forefront of this coming technological revolution will dominate their sectors in the same way Google dominates Internet search or Amazon dominates Internet retailing.
The opportunity is here for you to obtain once-in–a-lifetime generational wealth. That’s why I’m going to make technology and investment trends a big part of what I write.
A Fresh Look at Investment Opportunities
JL: Are you a follower of precious metals markets? Do you have an opinion about gold?
Paul: Precious metals and precious metals stocks are something I have actively traded in for over 15 years now. In 1999, I was buying gold stocks as the metal was bottoming. In 2002, I bought silver futures at $4 and sold them at $6. These are very psychologically driven markets. These markets go through huge cycles, where if you get in at the right time, and then sell at the right time, you can make an incredible fortune.
If you buy precious metals stocks right now, you’re putting yourself in a position to make 100% or even 200% or more over the next one to three years. The precious metals stocks are washed out. They’ve gone through a brutal bear market for four years. Mining executives are depressed. They are selling their mines off at prices that were unthinkable a few years. To me, this feels very much like 1999 and 2000, when you had similar things going on. You can say that I’m incredibly optimistic on precious metals stocks.
JL: One aspect of your investing regimen is going out, from time to time, to talk with leading experts in various industries. Tell us a little about why you travel to these conferences? What do you learn from talking with experts such as Nassim Nicholas Taleb (of The Black Swan “randomness” fame), the behavioral economist Daniel Kahneman and others?
Paul: Going to conferences and trade fairs gets me seeing the world from the perspective of the company that is selling the technology. Lots of new technologies, as promising as they might be, never catch on in the marketplace for one reason or another.
So, you want to go and listen to the salespeople talk about the products, you want to hear potential customers ask questions. You want to see how much excitement there is about the product. Using the product yourself to see if it works and is real doesn’t hurt either.
At these conferences, you also have the chance to talk to preeminent experts, the people at the top of their field. You can ask questions and listen to what they are thinking about.
You know, here’s the truth about investment opportunities — they’re about putting lots of information and ideas into your head and then figuring out if there is something actually going on that can make you money in the stock market. You’re trying to sort the “dead-ends” from the “live wires.” So talking to experts is just a way of getting more ideas and ways of thinking into my head.
JL: What do you think of the Federal Reserve’s monetary policy and management of the markets?
Paul: Monetary policy follows long cycles that span multiple decades. Don’t get me wrong — it is important. But at the same time, I feel people may place almost too much emphasis on what the Fed does or doesn’t do. There’s little evidence that monetary policy has a real impact on what makes people truly rich … which is by investing in cash-generating business opportunities.
You can find hundreds of successes of people starting businesses, in all kinds of monetary policy environments, that made people filthy rich. If you were looking to get rich, you would spend your time finding the next Google, Netflix, Amazon, Amgen or Celgene rather than spending your time on monetary policy. That’s what you should be doing — at least that’s the way I’ve done it through my own investment experience.
America: Still Alive and Kicking
JL: Do you have concerns about the state of America’s financial health? Should we be worried about those concerns, as investors?
Paul: America is still the greatest country in the world by my reckoning. We’ll always be at the forefront of technology and innovation because we have an open society where we have the freedom to think and the independence to act. At every step of America’s development there were problems and naysayers who doubted our country. We have always overcome our problems, however deep-rooted they are, and found a way to confound the naysayers. This time will not be different. Interest rates are low, commodity prices like oil are dirt cheap, people are leading longer, healthier lives than they did before. Why would anyone not ultimately be a long-term optimist?
JL: Where do you see the best investment opportunities in the broader markets over the next year or so?
Paul: Right now the place to be is in large- and mid-cap stocks. Within these stocks you want to own industrial companies that are going to be using some of the technologies I mentioned earlier … 3D manufacturing and printing, robotics, big data and artificial intelligence. You also want to own the shares of companies that make these technologies. Another place you want to be invested right now is in the development of self-driving cars, the digitization of money, virtual reality and gaming.
JL: Is there a last thought you’d like to leave with us, as you begin writing for The Sovereign Society?
Paul: Yes. Let me ask you a question: If you turned off your TV, stopped reading websites and instead talked to people who are working on some of the things we have been discussing, would you be more optimistic or more pessimistic?
If you looked at the world and said … gosh, interest rates are at near 50-year-lows, oil is less than $2 a gallon and commodity prices are at 15-year lows … and that virtually the whole world is now available to companies to sell to … would you be optimistic or pessimistic?
If you look at the world this way, then my view is that you would have to be optimistic, because the world has good things in store for us.
Do you have any questions that you’d like to ask Paul ? Would you like to know more about his outlook for the U.S. economy, stocks or even his approach to investing? Send me an email at email@example.com.
Editorial Director, The Sovereign Society