Short and Sweet
Worry about the return ‘of’ your money,
not just the return ‘on’ it
“To be fair, the fiscal side of our current system has been nonexistent. We’re not all dead, but Keynes certainly is. Until governments can spend money and replace the animal spirits lacking in the private sector, then the Monopoly board and meager credit growth shrinks as a future deflationary weapon. But investors should not hope unrealistically for deficit spending any time soon. To me, that means at best, a ceiling on risk asset prices (stocks, high yield bonds, private equity, real estate) and at worst, minus signs at year’s end that force investors to abandon hope for future returns compared to historic examples. Worry for now about the return ‘of’ your money, not the return ‘on’ it. Our Monopoly-based economy requires credit creation and if it stays low, the future losers will grow in number.”
Bond-fund guru Bill Gross posted that piece of advice in his Investment Outlook column back in 2016. It still applies today – maybe even more so now than it did then. In the wealth game, emphasize defense when you need to, offense when it makes sense. At all times, remain diversified. And by that, we mean real diversification in the form of physical gold and silver coins and/or bullion outside the current fiat money system. There is nothing wrong with owning stocks and bonds. Realize though that these assets are denominated in the domestic currency. If it erodes in value, the underlying value of those assets erodes along with it. A proper diversification addresses that problem now and in the future. Bill Gross, by the way, has recommended buying gold on a number of occasions over the years.