I think it is safe to say that my investment philosophy is not mainstream. In fact, I’m sometimes accused of being a survivalist, which I find to be a rather amusing accusation. After all, I don’t stockpile food, fuel or ammunition. I also don’t believe that the next financial crisis will throw us backward to a pre-industrial standard of living due to the wholesale disintegration of global supply chains.
I would, however, describe myself as a financial survivalist. Much like you, I have worked hard for every penny of savings I possess. I don’t ever want to face a situation in the future where my investment portfolio is down 50% or more. I don’t think you do either.
More importantly, if such an event were to occur, average people like you and I would have absolutely no financial recourse. Writing a letter to your congressman would get you nowhere. Appealing to the U.S. Treasury for restitution would be futile. If you were to confront your financial advisor, he would look you right in the eye, shrug his shoulders and loudly state, “No one could have seen this coming!”
Of course, such a bold pronouncement would be a vicious lie, meant primarily to distract you from his incompetence. All students of financial history know another major financial market dislocation is coming, although the when and how are certainly up for debate. I think most of us can agree that there must eventually be unintended consequences to the Federal Reserve’s misguided policy of holding interest rates near zero for a full decade. After all, if economies were really so easy to manipulate upward without negative side-effects, wouldn’t someone have figured it all out long ago?
As a financial survivalist, my main goal is to preserve my money. Growing that money is a secondary concern, particularly in today’s global financial minefield. This is because compounding your money aggressively and then losing most of it in a financial crisis is an unpleasant proposition, no matter how good it makes you feel on the way up. This is also a big reason why bubbles are so seductive.
But for most investors, a bubble represents massive gains followed by even larger losses. Almost nobody who makes money in a bubble actually keeps any of it.
Just ask the famous 17th century physicist, Sir Isaac Newton. He might have been a mathematical genius, but it didn’t keep him from losing his entire fortune in London’s 1720 South Seas Bubble. At first, he invested a little bit of money in South Sea Company stock before promptly exiting his position for a nice profit after its price moved up sharply.
However, the stock price kept on rising, this time without him. As Sir Isaac Newton looked around and saw his friends and associates who still owned the stock getting rich, he felt compelled to dump his life savings back into the market. This was a fatal mistake. Within a few months the South Seas Bubble had burst, costing Newton almost everything. As he famously lamented, “I can calculate the movement of stars, but not the madness of men.”
I think we could all benefit from listening to the father of Newtonian Physics. If this makes me a financial survivalist, then so be it. I’m not interested in fitting in with everybody else just so we can all commiserate about losing our life savings together later on.
Being a financial survivalist means that I’m a fairly conservative investor. This is especially the case today, when so many investments are so overpriced. I don’t like taking big risks with my money. Ironically, though, the best investments at this juncture in history are also those with the lowest risk.
I’m talking primarily about tangible investments, including bullion, fine art and antiques. The benefits of these assets are immediately apparent to any good financial survivalist. Middle and upper class households have successfully used them as wealth preservation vehicles for centuries. And they are completely independent of both the Wall Street menagerie and our syphilitic banking system.
But fine art and antiques have been largely left behind in today’s world of complex derivatives, high-frequency trading and inscrutable crypto-currencies. That’s why it is still possible to pick up some very compelling values in the hard asset space for shockingly low prices.
For example, you can purchase a solid 14 karat gold Bulova Accutron wristwatch from 1973 for only $1,000 – less than the price of a single share of Amazon. Or you can buy an avant-garde contemporary drypoint print by the New York artist Mariko Kuzumi for a scant $200 – less than the price of a single token of the Monero crypto-currency. Or you can invest in a highly desirable, 1 kilo Johnson Matthey vintage silver bullion bar for about $800 – the cost of just over 3 shares of Netflix.
I don’t care if I’m “missing out” on the market bubble, because I understand how all bubbles eventually end. All I care about is holding onto what I worked so hard to earn. And if you also like holding onto your hard-earned money, you may be just like me – a financial survivalist.
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