There’s no substitute for first-hand knowledge to my way of thinking.
That’s true both in terms of the lessons learned and the specific recommendations I make.
Riding BMWs through Europe’s fertile farming regions, for example, led me to Monsanto Co. (MON) and led readers to one of the first 100% winners I recommended after becoming Money Morning‘s Chief Investment Strategist.
A crazy day piloting antique sidecars in Shanghai, China, helped me identify Sinovac Biotech Ltd. (SVA) as a promising investment opportunity and the resulting 351% winner that went with it.
Ducatis in northern Kyoto, Japan, led me to recommend two plays on the Japanese yen, the Invesco CurrencyShares Japanese Yen (FXY) and the ProShares Ultrashort Yen (YCS), that beat legendary investor George Soros to the punch by six months. Both helped readers who were following along to more than double the returns Soros reportedly achieved, according to The Wall Street Journal.
My trip this year around the American West was no exception in that department.
I’m going to be sharing a recommendation with you in the weeks ahead that could double if what I learned about a quintessential American automaker during an early morning, coffee-fueled pre-ride conversation proves out. So, you’ll want to check back for that shortly when I’ve completed my research.
In the meantime, though, I want to share three key investing lessons from this year’s ride…
Believe it or not, there is a lot of crossover between the kind of thinking it takes to successfully navigate a motorcycle across thousands of miles of remote territory and to generate the huge profits that are possible from making the right investments.
In fact, the inputs are almost identical.
Lesson No. 1: Never Doubt Local Knowledge
From the Road: I made it a point this year to follow the old emigrant wagon trails. My goal was twofold: a) I’ve always wanted to see how our country’s earliest roots were established; and b) I wanted to get a taste of what my ancestors experienced more than a century ago when they crossed America in covered wagons, along with other emigrants, in search of a better life.
That meant a big shift in my plans and an entirely new level of detail. Most of my touring to date has been by road, and now I was talking about remote wagon trails and dirt pathways on a big adventure on my motorcycle, hundreds of miles away from anything or anybody.
The logistics were challenging, to say the least. Some things, though, were downright unexpected… like being warned about “Bigfoot” in northern Idaho by a well-meaning and very sincere hotel clerk who’d heard where I was headed that day.
The look on my face must have said it all because she then added, “That thing eats our goats and we hear ’em yowling at night.”
Indeed!
Still, I have to admit, I couldn’t help but look over my shoulder when I hit the Poverty Flats and Old Emigrant Hill Road area a few hours later… in the deep woods… miles from anything or anybody.
From the Markets: Many investors assume that analysts know all there is to know about the companies they follow. So, they take them at their word when it comes to how and why the markets move.
The problem is that it’s the “unexpected” that causes change.
We all know, for example, that the current bull market will come to an unceremonious end one day without warning. History shows financial stimulus ends with a bang rather than a whimper.
In other words, bad news isn’t exactly a surprise any longer. But presidential tweets, political vitriol, Russian hacking, Chinese retaliation… those are all things that can severely impact your financial portfolio, if you’re unprepared, because they’re the financial version of a “Bigfoot” sighting.
Alphabet Inc. (GOOGL) trades at $1,250 a share right as I write this, and Amazon.com Inc. (AMZN) is a lofty $1,815.40, which means chances to buy them “on the cheap” are fleeting. However, that also means that anything that unexpectedly knocks them down a few notches will create a massive buying opportunity.
Even a financial “Bigfoot.”
Lesson No. 2: Flexibility and Risk Management Go Hand in Hand
From the Road: I covered roughly 3,000 miles on this year’s trip, including a huge chunk of that in the remote high desert all by myself. That’s not a big deal in a car or well-equipped truck, but it’s potentially lethal on a motorcycle if something goes wrong.
This year I had to reroute three times for forest fires, lightning storms, and bridge washouts. Fuel was a very real and very serious concern. The last thing I wanted to have happen would be to run out of gasoline 100-plus miles from civilization.
So, I carefully checked my maps and my GPS daily and, in some cases, hourly. Like the pioneers of old, I constantly scanned the horizon for signs of inclement weather. I regularly thought about where and how I’d take immediate shelter if I had to hunker down in an emergency for any reason.
I also did everything I could to prepare ahead of time for contingencies, including carrying redundant cell phones, extra batteries, fuel, water, and survival gear. Most importantly, I also carried a GPS beacon linked into the Globalstar network – in case all else failed.
Thankfully, none of that happened, and I had the trip of a lifetime.
From the Markets: Many investors make a fundamental mistake when it comes to their money, in that they “set it and forget it” – meaning they blindly buy a stock and assume that it will carry on forever.
Most stocks don’t, resulting in entirely predictable results that could be avoided if those investors were to look at a “map” – or in financial terms, a simple stock chart.
General Electric Co. (GE), for example, has fallen a staggering 78.53% from its peak of $60.50 in August 2001 to a low of $12.99 per share, as I write, and in the process, turned many a 401(k) into a 201(k). Shares are quasi-stable for the moment, but I wouldn’t bet on that company any more than I’d trust a thundercloud on the horizon. Cash flow’s down and so are earnings.
Eastman Kodak Co. (KODK), a once unassailable American brand, is dabbling in blockchain – but it’s little more than a “hail Mary” pass, intended to stave off the inevitable. Kodak’s “KashMiner” – a misleading and very controversial Kodak-branded cryptocurrency mining company – shut down recently, following a Securities and Exchange Commission intervention into what it deemed an illegal scheme. This is not the Kodak we grew up with nor even remotely an “investment.” At best, it’s a speculative potshot.
Investors plan for everything but success, which is why I constantly return to the “tool” and maps of our time including Total Wealth tactics like Trailing Stops, Profit Targets, and LowBall Orders. They’re designed to keep you and your money on track for huge profits – no matter what the conditions are ahead.
Lesson No. 3: History May Not Repeat Exactly, but It Sure Does Rhyme
From the Road: I’d always wanted to visit Promontory Summit because I have an interest in places that have changed history, not merely enabled it. So, I made that a priority on this trip.
If that name doesn’t ring a bell or you can’t place it, you’re not alone. Most Americans have no idea what it is, where it is, or even why it matters. But it does matter.
Promontory Summit is the place where the Union and Central Pacific Railroads joined their rails with a “Golden Spike” on May 10, 1869, and, in doing so, ushered in the Industrial Age.
Traveling around the “Horn” became moot – as did most of the “wagon trains” that had been the mass transit of their day. Prior to the railroad’s completion, a cross-country journey would have set you back $1,000 and taken six months. That dropped to $150 and a week within months of the linkup. In case you’re curious, that’s like paying $17,786.41 in today’s money to make the journey from New York to San Francisco.
Today that would be nearly $1 billion dollars or $889,320,628.20.
Production of damn near everything skyrocketed as raw materials were more easily and quickly brought to market via rail from previously unthinkable distances.
Not all was good, though. Native Americans saw their cultures destroyed in the name of progress, a legacy I find appalling. So, too, was the wholesale destruction of natural resources that made the western expansion possible.
From the Markets: There are several “Golden Spike” locations around the world today, including Silicon Valley (San Francisco’s Bay Area), Zhongguancun (Beijing’s tech central), Silicon Allee (outside Berlin, Germany), and the Silicon Wadi (near Tel Aviv, Israel), for example.
Biotechnology, chips, software, networking, the Internet, and more… these are all of today’s “rails.” And, like the railroad did back then, they’re changing our world today.
Take CRISPR Therapeutics AG‘s (CRSP) CRISPR-Cas9, for example. CRISPR-Cas9 stands for “clustered regularly interspaced short palindromic repeats” – a gene-splicing technology that can identify and remove damaged or mutated DNA sequences that cause cancer, genetic blindness, and other bloodline-borne diseases.
Doctors using Big Data mining discovered that non-cancerous cells have a direct relationship to cancer-causing cousins, but they didn’t know to look for the relationship until Stanford University researchers figured out that they should look at cell proliferation rates.
Ominously, privacy has gone out the window and that genie is never going back into the proverbial bottle. Equifax, hacking, identify theft, black market credit card sales… these are some of the more benign criminal activities we’ll face as technology is increasingly woven into our lives.
The wearable tech everybody thinks is so cool at the moment, for example, is going to come back to haunt us. I can easily imagine the snazzy new wrist monitor you’re wearing reporting the extra donut you enjoyed this morning and seeing your life insurance premiums go up tonight.
Insurance companies are already moving in that direction with the remote sensors they want to install in your car. They’ll get you hooked by lowering your rates initially in exchange for an “install,” then use that information against you to adjust rates. Eventually our entire lives are digitally quantified in the name of higher returns and less risk.
Honestly, I’m not certain how I feel about that. I’m disgusted by the loss of individuality but excited as all heck by the profit potential.
Keith Fitz-Gerald
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Source: Money Morning