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Supreme Investing Confidence: How I Got It and How You Can TooBy
Friday, November 27, 2009
"Why did it take me until age 38 to get here?" I asked my wife this week.
She said, "At least it didn't take you until age 68. And really, most people never get there." I'm talking about total confidence... total conviction in your investments. I'm NOT talking about being cocky, or being foolish, or taking big risks. I'm talking about having the certainty to invest when the time is right. Look, I know I'm the same knucklehead I was a decade ago... I haven't picked up any significant new skills. But I do have something far more valuable when it comes to investing: I have conviction. And it's paid off, as I'll explain. A decade ago, though I was relatively young, I had plenty of experience. I had completed my PhD... I'd been the vice president of a global mutual fund... and I'd written an investment newsletter for a few years. But when it came to my own investments, I didn't do as well as I could have. It's because I listened to others... Fifteen years ago, I'd share what I thought was a unique idea with someone superior to me at work, and they'd knock it down. Since I thought it was a good idea, I'd share it with someone else. They'd knock it down, too. I'd keep going, with the same results. When everyone above you says your idea stinks, then it probably stinks, right? That's what I thought back then... And that is true in most of life. But that is NOT true in investing. Once I stopped caring what others thought, I started making real money. Here are a few things I've done with conviction in the last decade: · In January 2000, when most people were crazy for stocks, I wrote in my newsletter, "We are at the peak of most likely the greatest financial mania that will ever be seen." The Nasdaq fell 75% peak to trough in just over three years. · In 2003, I started investing in and writing about gold. I've never had more people tell me my idea stinks or look at me like I'm crazy than when I wrote about gold. But gold went from a low near $250 to near $1,200 today. · In March 2009, when everyone thought the world was going to end, I personally invested a big stake of money in stocks – my biggest speculation ever. I closed out that big speculation in June 2009, for a large profit. Lately, I've been buying extremely depressed Florida real estate. Friends and family are asking why. They won't say it, but they think it's foolish... that it's dead money... that it won't come back for a while. For the first time ever, their opinions don't even faze me. Honestly, the prices I'm paying... jeez... Nowadays, you can buy trophy properties out of your checkbook. So please, call me foolish. The more I'm called a fool, the more I have conviction I'm right. If you've done your homework and you believe you're right, it's OK to ask everyone to punch holes in your idea. That's what you SHOULD do. The trick is to separate FACTS from OPINIONS. When the facts and opinions don't line up – bingo. It's time to buy. The true liberation for me... the true ability to make really big profits... came when – after I'd done my homework and most smart people still disagreed with me – I was bold enough to step up and make the investment anyway. I only kick myself a bit because I could have done this years ago. But my wife is right. Better to get it at 38 than at 68... or never. The nice part from here is, I know that every few years, I will find a special opportunity... and I will have the conviction to jump on it when the time is right. I hope you can get there too. Have courage. Have conviction. Dot all your Is and cross all your Ts, of course. But take the leap! Good Investing, Steve P.S. I get energized – I get conviction – from books by other folks who have done what I'm talking about. One of my favorite books along these lines is How to Get Rich by Felix Dennis. It's a fun read. You can burn through it in a couple hours... and it could just change your life. Market NotesWHY YOU SHOULD INVEST IN AUSTRALIA
Today's chart shows that once again, the ABCs are the place to be these days.
Years ago, Wall Street began using the acronym "BRICs" when discussing investments in the developing countries of Brazil, Russia, India, and China. We say, "Go ahead and watch the BRICs... but also watch the ABCs." The ABCs are Australia, Brazil, and Canada. These are the three best countries for long-term investment in commodities like oil, uranium, copper, iron ore, and sugar. Each country has managed its finances better than the U.S. Each is loaded with the raw materials growing giants like India and China need. Take Australia. The Land of Oz is a major producer of iron ore, coal, wheat, gold, uranium, and natural gas. It has excellent rail and port infrastructure. It sits on the doorstep of Japan and China. And while the U.S. dollar has spent its time crashing, the Aussie dollar has spent its time soaring. It's as close to a gold and commodity-backed paper currency as it gets. 
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