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How to Be Extra-OrdinaryBy
Friday, December 11, 2009
At an investment conference last week, I presented a simple – but extraordinary – investment idea...
That's extra-ordinary – as in "out of the ordinary." The simple idea is a way to earn 18% interest with essentially no risk, thanks to the government. This simple idea requires people to do something a little different than clicking their computer mouse to buy a stock... It's still easier than buying a book on Amazon. But it is out of the ordinary. The idea is tax-lien certificates. I just bought three more tax-lien certificates last week... The properties I have tax-lien certificates on are typically worth 20 times the lien. And the tax-lien certificate is the first lien on the property... so my chance of getting paid is about 100%. I could make as much as 45% in 30 months (tax-lien certificates pay simple interest of 1.5% per month in Florida), with nearly no risk. It's a "holy grail" investment idea at this moment – high returns with very little risk. Yet when I presented it at the conference, I could see people in the audience nearly falling asleep. I couldn't believe it. Am I really that bad a public speaker? Is the idea that hard to understand? Maybe it's because I was the third speaker of the night... The two other speakers that evening were smart guys. But they're investing the ordinary way. They're fishing in the same pond as everyone else... using the same tools. They're hoping for something extraordinary. But you don't get extraordinary results with ordinary methods. It's the same for individual investors. Most people do the "ordinary" thing with their investments... and they somehow expect extraordinary returns. But why? I drove home that night wondering if I'd wasted my time and theirs. I think my simple idea was just too out there... and I guess people came to hear "ordinary." Then yesterday, I got a call from the local business journal. The reporter was sitting in the back of the room for my speech. "I usually just hear the ordinary investment stuff," she said. "You know, diversification, asset allocation, et cetera. But I'd never heard about what you were talking about. I'd like to do a story on you..." She heard me talk about tax certificates. And she heard me talk about gold coins and stocks in Ecuador, where readers made triple-digit returns in both cases. The particular investment ideas aren't important today. What's important is to be "extra-ordinary." Remember this: Investing the ordinary way will give you ordinary returns minus fees... at best. But investing in an out-of-the-ordinary way – and limiting your downside risk, of course – can lead you to extra-ordinary returns. If your portfolio is full of ordinary ideas, then make some changes... now. Good investing, Steve
Further Reading:
I'm Earning 18% Interest from the Government. You Can Too... Market NotesTHE "BIG MONEY" IS ALWAYS MADE HERE
The past 12 months of trading in crude oil is why we urge all readers to become connoisseurs of extremes...
Back in December 2008, we noticed a little-known indicator had turned bullish on crude oil. This indicator is the "gold/oil ratio." Gold and oil are both widely traded commodities... and they respond similarly to inflationary pressures and investor sentiment. But occasionally, gold and crude get extremely out of whack. These extremes present trading opportunities. We highlighted such an "extreme" opportunity last Christmas, when oil became incredibly cheap relative to gold. Right after, crude staged a huge rally from $38 per barrel to $73. Then, in late June, we noticed the crude rally had returned the gold/oil ratio to a normal level. We even said "the easy, early money" had been made in oil. Today's chart shows this prediction was right on. Since reaching the mid-$70 area in June, crude has drifted sideways. It staged a small breakout in October, only to fall back down toward $70. It's a perfect example of how you make the easiest, biggest money at the extremes. From there, it's a hard dollar, baby. 
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