The Rookie Cynic’s guide to survival investing

  • Nothing has a constant value.
  • Wealth flows in and out of currencies, stocks, real estate, commodities, bonds, and precious metals.
  • When wealth flows away from something (i.e housing recently), that thing loses value; when it flows to something (i.e. commodities recently), that thing gains value.
  • There’s always a mix of appreciating and depreciating assets and a background of inflation or deflation.
  • In general capital flees taxes and political instability and is attracted by bubbles and prosperity.
  • We can be either victims or beneficiaries of the flow of capital.
  • Timing the exact tops and bottoms of these flows is very difficult, if not impossible.
  • Investing is becoming more of a zero sum game, meaning there’s a winner and a loser. We are all “marks”.  The rich and powerful can’t get more rich and powerful unless someone else (taxpayers, the middle class, pensioners, etc.) takes a loss and they gain.
  • Without surplus energy, there will be stagnant worldwide economic conditions. In such an environment, the contrast between winners and losers will be more stark.
  • The markets are mostly rigged against the average investor.
  • Fiat money is dependent on exponential debt creation, so even if deflation is the predominant economic force, monetary inflation will be the predominant policy even if it means destroying the currency.
  • The era of 10% returns year over year are over. For example 10% growth implies a doubling time of 7 years. I don’t see the world economy doubling in 7 years because we’re running short of oil and other vital resources.
  • Simply preserving the value of your surplus income is a reasonable, if difficult to achieve, goal.
  • Most people don’t own gold. This is a very foolish, if not dangerous mistake.
So go with the flow my friends, but don’t get wiped out.
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