By Kris Sayce, editor, Casey Daily Dispatch
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There are always opportunities to learn from the past.
Today we take our lesson from a book written in 1939.
It’s not an economics book.
It’s not even a tale of the markets…
Or the ins and outs of the Great Depression.
Instead, the lesson learned comes from a biography of a president who had died 77 years earlier.
But how is that relevant to you and your investments today?
Stick around and you’ll find out…
If this is your first time reading the Dispatch, welcome. If you’ve been here before, welcome back.
At the Dispatch we have two goals:
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To introduce you to the most important investing themes of the day, and
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To show you how to profit from them.
We do this by showcasing ideas from our in-house investing experts, Dave Forest and John Pangere. And from the founder of our business, Doug Casey.
In today’s issue, we look at why you should avoid ideas that scare you from investing in the market. To do so, we quote from the biography of a long-dead president.
And despite the passing of time, the message is still relevant today.
Don’t Risk Running Out of Time
The biography in question is of the 10th U.S. President, John Tyler. Tyler may not be the most memorable president, but he knew the benefits of free markets when he saw them.
Two excerpts from the relevant passage of text follow. In the first excerpt, the biographer refers to the 1830s, when Tyler was a Virginia senator.
If the policy advocated by Tyler had been adopted by the government… the economic history of our country might have been quite different from what it has been…. [The] United States was destined to become a great industrial region and would have been such today [in 1939] if the government had not lent its aid in hastening the result.
The second paragraph refers to the period of the biographer’s own lifetime, which included the Great Depression:
[If] our industries had not been pampered by government aid and had been forced to rely more on self-help there might have developed in our business leaders an initiative and sturdy self-reliance that were badly needed but woefully lacking in the recent period of economic stress. For if American industry had not been inflated into abnormal dimensions by governmental pumping… it might have had sufficient stability to withstand the forces of panic which have lately been beating against it.
[Editor’s note: Why we’re reading a biography of President John Tyler is almost too dull to tell. In short, your editor is working his way through biographies of all the presidents, in order, from George Washington onwards. We have made it as far as the 10th!]
The first point we hope we’ve made (arguably, painfully so) is that the problems facing the American and world’s economies today aren’t too different (economically speaking) from those in 1939 and the 1830s.
And the cause is the same: government interference through tariffs, red-tape, taxes, low interest rates, and money-printing. All of them distort the economy in one way or another.
The second point is to think that governments and central banks will suddenly stop interfering, so you can invest without those distortions, is unrealistic.
History tells you that governments can’t stop themselves from interfering. It was so in President Tyler’s time… it was so in Oliver Perry Chitwood’s time (the author of the biography)… it is so today… and it was so at any point in-between.
You understand what we’re getting at.
There Is No “Perfect” Market
The fact is, a typical investor has a limited window to invest. For most, the accumulation phase is 40–50 years. For those who start investing at a later age, it’s perhaps only 20–30 years – maybe less.
Not that the investing ends then.
You have perhaps another 20–30 years of the drawdown phase, when you have to live off your investments in retirement. That’s either by drawing an income from the investments or using the capital.
This is why we dislike the approach of many “perma-bears.” (You can catch that essay here.) Because you can’t afford to wait for the perfect market conditions.
If you did so, you would likely run out of time.
Instead, our take is that you should make the best of the situation you have before you. That means being flexible in where you invest… and it means being open to different ideas.
Just because the S&P 500 may appear to be expensive, it doesn’t mean it can’t go higher. But if you’re worried, maybe adjust your investing timeframe on those stocks… or use stop-loss orders.
Or what about warrants for leveraged returns? That way you can stay invested, while at the same time reducing the amount you need to put at risk.
You see?
Already in the space of a few words, we’ve given you a handful of basic ideas to allow you to become or remain invested in the market.
And we haven’t even touched on other investing ideas, such as gold and silver, cryptocurrencies, private deals, commodities, foreign exchange, and so on.
We do hope we’ve gotten the message across – sitting it out and waiting for the “perfect market” to appear just isn’t a viable option.
And with so many ways to invest – different strategies and asset classes – it isn’t necessary either.
Cheers,
Kris Sayce
Editor, Casey Daily Dispatch