The Bleeding Obvious and why you are not allowing yourself to be rich

I was watching TV this morning and on Bloomberg they were showing the price of a barrel of Brent Oil at $32. About 3 months prior I had a chat with a friend of mine when oil was basically $10 a barrel, saying that this can’t last and the world has to keep the lights on, so oil will go back up. We tripled our money on the bleeding obvious. But why is it that others didn’t see this, yet lost their jobs, lost money in the stock market, etc?

Money is made without any labor effort based on the simple rule of buy low, sell high.  If you embrace this, you probably feel like a lottery winner when the stock market goes up, but you invested when it was low.  But although there is a 50% chance that the opposite may happen, there are times when the bleeding obvious is staring you in the face and the probabilities shift to be far more in your favor of winning.

Such was the case with Oil.  It was damn obvious when an artificial price reduction occurred and yet we all know that the world needs energy.  It is a physiological need.  Imagine living without power.  I remember driving through Amish country in Pennsylvania many years ago into communities that didn’t have power, and I saw how the world probably looked 200 years ago.  Is that what people want in the 21st century?  No.  We need the lights on, the refrigerator working and our air conditioners.  That’s bleeding obvious.

So why is it that the wealth creation on oil wasn’t the leading headline in business news?  Why is it that only contrarians are benefiting here?  Why is it that people can’t see the bleeding obvious, until it has passed them by and they are beating themselves up?

I have had many conversations with people regarding the stock market.  Many are those that are following the teachings of FIRE (Financial Independence Retire Early).  Whereas I agree with the concept of frugality, and saving a huge portion of your money, I disagree with their investment strategies.  Why?  Because the core tenet of this is to give up control of your money to a counter-party.  Who are the counter-parties?  The stock market for one, and then counter parties on counter parties such as Vanguard, etc.  I have written before that I hate the stock market.  You can read that article to find out the gory details.  But the general problem here is that I’m not looking to double my money over 10 years or 20 years.  And I don’t gamble in casinos.

I don’t know what the world is going to look like in 10 or 20 years.  That’s the bleeding obvious observation.  What I’m looking to do is to get 10-100x returns in a short period.  That’s going to involve embracing of a lot of risk.  And it is also going to require me to accept that 9 times out of 10, I will not get it.  Probably 50% of the times I will lose money, the other 40% I might get a modest return or break even, but it is that 1 in 10 punt that gets you the “100 bagger”.  I’m willing to punt.

Why?  Because life is a risk.  And it comes down to your willingness to accept that, and to learn to navigate in those waters.  Most of the time, risk mitigation is about seeing the bleeding obvious before it is upon you.  I hate to break your perception of the mega-wealthy, but other than those that garner the spotlight because of their business acumen, most wealth is created by dumb people who take risks.  I know the wealthy would hate me saying that, but it is true.  Why is it that your college degree has not correlation to your wealth?  If you embrace the idea that having a big PhD or MA or BS means you will make 2-3x more in income from your job over your working career, you lost the entire plot right there.

The smarter, better educated person that did it for that reason was looking for a way to avoid risk.  They didn’t want to take on the responsibility of earning money themselves (for the most part).  They are looking to be a wage slave to an employer and they believe that they can make more money because of their education.  But the flaw to this entire argument is that they are willing to be a slave to get it.  They want a “cushy job”, whereas the investor or speculator that bought oil barrels at $10 each and sell them for $50 each didn’t have to lift a finger other than to go their computer, move some money around, press a few buttons and voila - wealth.

Our society is not telling you this.  It is telling you to go to school, study hard, graduate, get a good job, work like a slave for 40+ years and then you can retire.

The entire premise of this is bad from the start.  It is a model sold to you by the banks - the very same banks that make massive income from doing nothing, other than to move money around, lend it to you so you give up your future to them, and find a way to extract that largest amount of extorted wealth (ie. interest) over your lifetime that they can.  By finding a way to start as early as possible (student loans) that pushes out the interest money until the latest time (mortgages because you will likely never pay it off).  This is the bleeding obvious.  If you can’t see this, you are blind.

The problem is that if you have immersed yourself in this social mantra, the most likely (and often only) investment vehicle that you see are stocks.  So the folk in that hypnosis will embrace an employer giving them some 401K matching as a “win”.  They will embrace when the stock market drops by 10-20% as a “loss” but they will justify it all by saying, “If I stick it out long enough in this, it will recover and if I dollar cost average, I will do fine”.  Great, if you want to live like a slave for the rest of your life.

But the bleeding obvious isn’t going away.  What is going on that is bleeding obvious right now, you may ask?  Here’s a few that should shape your perception of the years to come and where opportunities might lie:

  • The dominance of the $USD as the “world currency” is coming under pressure.  Although the $USD has been strong of late against other currencies, the problem is that it doesn’t support exporting products from the USA, making farmers suffer and making US consumers more and more reliant on global outsourcing.  
  • US power is based simply on the IMF and the dominance of the USA in all world economic trading.  80% of all financial transactions of reasonable sizing is done in $USD.  But little by little this is being eroded due to the instability of the USD.  Recently the mining giant corporation Rio Tinto, started to settle their financial transactions with China in Yuan.  Why?  Because Yuan is far more stable a currency and if more corporations, countries, etc. start to use it as an alternative “world currency” the dominance of the USA in the world will be eroded.
  • The risk factor of a country that is printing money out of thin air to bolster its own economic stability is further evidence of the fundamental economy in the USA being built on flawed foundations.  The risk to individuals of extreme highs & lows remains, just as it has become the norm over the past 25 years or so.  This means that over time the wins that people may have can be quickly wiped out by financial engineering.  As people get older and will gain more wealth, keeping it will become a harder task.  Look at the struggle that retirees are having now with low risk investments and interest paid on savings.
  • The biggest risk factor in the world is China.  China have the responsibility in 2021 to demonstrate to their massive population how their lives have been improved since it will be the 100 year anniversary of communism in China.  Numbers matter here.  The stated objectives of the party must be realized in order for those in power to retain their positions.  That means that the threat to Chinese territories that are unstable will be quashed with force.  Hong Kong, Taiwan, South China Sea, etc. are all fair game to China.  So too is the border with India & Nepal.  The stated assumption that Mt. Everest is Chinese owned demonstrates just how willing this regime is to occupy and conquer.  

  • Meanwhile the rest of the world is rising up against China due to the Coronavirus.  The perception of Chinese communism is 90% negative to the rest of the world, and although Chinese GDP is no longer being tracked as a measurement of growth, they are celebrating their rapid ascension from this pandemic back into a dominant economy.  They have debt enslaved third world countries who can’t pay back their debts now, and China is seizing assets as a result.  The situation with Sri Lanka’s sea ports is a perfect example of this.
  • This means your products will get more expensive.  That’s the bleeding obvious.  If everything in the US economy has been tied to global outsourcing to get jeans at $20 each, or phones for $100 or Barbie Dolls for $5, and you take China out of the mix, every single product that you buy will go way up in price.  The effect on inflation will be dramatic.  And if China was to attack Hong Kong or Taiwan to quash dissent, the natural retaliation of the USA and its allies will be to sanction China.  They won’t take up arms, because they are dealing with a nuclear power.  But they will sanction.  When they do this, and China starts reverse retaliation against it (as they have done with Australian refusal to buy Barley & Beef Cattle, and the looming threat of 80% tariffs on Australian exports), the Chinese products you find in Walmart, or the car parts in your cars, or the electronics that you use, will double in price.  And that is just the start.
  • If prices do go up, your inflation rate will go up.  And with that the only way to avoid hyper-inflation will be to raise interest rates.  That’s not going to be comfortable to you and your credit card debt, or your student loans, or your car loans, or your mortgages.  But because society is slaves to the banks, they are going to be the ones to pay the piper here.  That means also that the massive debt at a national level ($23T) will have massive interest payments to the very same banksters, and that means less spending on entitlements, less spending on defense, less govt programs, less infrastructure investment, etc. 
  • It comes down simply to whether China act to seize territory.  But 2021 is a critical year.  I am laser focused on this right now, and one of the best sources I’m finding for what is going on is the Indian YouTube/TV News channel NewsX.  This is an important video worth watching:
  • The disruption in the rest of the world due to the USA dominance in world currency means that countries that tie their own wealth of their people to their own currency against the USD are suffering.  Look at what is going on in Argentina right now.  Will the Argentinians put up with this for much longer?  Will they revolt against their leaders to rise up out of poverty?   Other Latin American countries are feeling the pinch as well.  The Mexican Peso is at 24:1 right now against the $USD.  The worst it has been for decades.  Yet Mexico has the chance of being enormously wealthy as the USA shifts away from China in their supply chains.  

So the question comes down to you.  Are you going to continue to be hypnotized by social mantra that tell you that you are only worthy to be a wage slave, and only worthy to get any wealth by using the “government approved” US stock market?  Are you not seeing the bleeding obvious here, that it is the banks that control the puppet strings?

Are you not willing to look further than your nose at what is going on in the world?  Or do you want to defend your position on sticking with your job, your 401K, your stock market portfolio as the only way to survive in this?  Meanwhile the value of your $USD is being destroyed and the cost of your life could double or triple in the next few years?

Are you not interested in keeping an eye on the bleeding obvious in world affairs and benefiting from the opportunities that open up from it?  Did you just pat yourself on the back because the cost of filling up your car with gas is cheap, or did you realize that could have thrown $1,000 into oil futures and tripled your money?  Or was that an opportunity that only the rich can take part of?  Meanwhile you are only allowed to buy Vanguard funds and lost ONLY 10% of your money over the past 3 months?

Wake up.  The bleeding obvious is out there.  You are seeing it, but you are hypnotized to dismiss it.  Your day to day habits, social norms, etc. are going to kill you if you don’t wake up and see things for what they really are.

It is time to get some confidence in yourself and pull yourself out of the social norms to speculate and invest in real assets, or look outside of your domestic world and see the rest of the the world as opportunity.  The opportunities in the USA will be slim over the next 5 years or so.  So look elsewhere.  If you can’t see that a country that has unemployment rates similar to, or exceeding the rates of the great depression won’t have some dark days ahead, you are not seeing the bleeding obvious.

  • Dave 4 years ago
    What actions are you taking ( & you would recommend we take), given the current world situation, in order to build wealth outside of the typical US stock market? Thx.
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    • Myles Wakeham 4 years ago
      What is your purpose for building wealth? Do you want to be rich, or do you want to be free? (pick one).
      Reply | Quote and reply
      • Dave about 4 years ago
        I want to be rich as it will allow me to be free - ultimately, I want freedom & financial security for me / my family to live comfortably. I don't need to be a billionaire, just comfortable & free. Please explain why you asked to choose one - rich or free? Interesting way to pose the question. Thx.
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        • Myles Wakeham about 4 years ago
          There is a way to "end run" the concept of being free - have no debt, have a frugal existence and not have the need to earn income. If your goal is that, then it is much easier to build wealth. And if you are doing that first, then your profits that you get perpetually after your burn rate is satisfied, can be funneled into decent investments. To simplify this, first have no debt. Pay off your debt with your assets first. Not paying a 15% interest rate by having no debt is a better return than earning 15% on your money. Second, have at least a 6 month burn rate in liquid capital assets that you can use in the case of emergency. Third, what is left (and this is what I would do - you have to make your own decisions with this), but I would move it outside of the USA and look to banks in areas like Mexico or Georgia (the country - not the state), that pay between 3-8% interest on that money in larger institutional and international banks. You will need a good tax attorney and CPA to handle this for US regulations (I'm assuming you are a US person), but with that structure, you can earn far more than here with minimal risk and 24 hour access to liquidity should an opportunity surface in the USA. The final suggestion would be to invest it in 2nd or 3rd citizenship passports by way of CBI (Citizenship Based Investment) in other countries to provide you with an escape route. Check out Andrew Henderson's Nomad Capitalist book or YouTube channel for more info on that.
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          • Dave about 4 years ago
            Thank you Myles! For context, as I didn't provide previously - I am debt free and have checked the boxes that you outline above in "First" and "Second". While I am pretty risk averse, I particularly hate the volatility of the stock market as I have no control. If I am taking risk, I would rather do it in investment areas that are more under my control - hence the reason for inquiring about other investment options. Related to your "Third" above, I like your recommendations on other country alternatives. In fact, not that it will help for the options you outline above, I have dual US & EU citizenship. I actually reside in AZ which is where I know you reside as well. Additionally, I despise the healthcare insurance system in the US and would welcome living outside the US for a part of the year in the not too far future - we will see if that will be possible or not.
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            • Myles Wakeham about 4 years ago
              Ah, then you are well on the road to be totally unconstrained. Being so close to Mexico, a short flight from Sky Harbor to GDL or MEX will give you access to a world of alternative investments, and Mexico is a bit more favorable to US person banking than most regions. They would prefer you to have some temp VISA (not tourist VISA), but that's easy enough to score with a trip downtown Phoenix to the Mexican consulate, fill out some forms, and then have a lawyer in Mexico do the in country stuff. That way you have access in/out at will rather than this "close the border" thing they have going on right now. Good luck, but there is a world on your doorstep that is available to you and may be what you are looking for.
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