Dear Reader, My old mate Dan Denning has been writing about an important concept recently. The ‘Big Loss’. It’s not new. Investing veteran Richard Russell used to talk about it. Investing is mostly a search for capital gains…and dividends, of course. These gains are compounded over time. So compounding at 5% makes a big difference, naturally, as opposed to compounding at more than 10%. But whether you get 3% or 8% in any given year doesn’t really make much of a difference. It’s the long-term average rate of growth that matters. And as long as the number is positive, you’re moving forward — toward your goal. When you’re young, you can even afford a loss from time to time. In fact, you should expect it. That’s why the general rule is that you should take more chances when you are young — chances on your career as well as your investments. That’s when you have the most to gain and the least to lose. But as you get older, the calculus shifts… Take a Big Loss and you may never recover. So, where’s the Big Loss likely to come from in the months and years ahead? Very broadly, Dan Denning and Bill Bonner pinpoint: Cryptocurrencies, which they believe could go to zero anytime.Tech stocks, which Dan expects to be cut at least in half.Stocks, generally, which are overvalued.And bonds, which will be largely wiped out in an inflationary episode.I’m not sure I agree with them on point one. But the rest seem very possible. The most important point is this: if you feel, in your gut, that big losses are coming…at some point, from some part of the asset markets…what should you do? First and foremost, you should read this. It’s an interesting guide to avoiding big losses, wherever they are, caused by pandemic-deranged politicians, misguided do-gooders and delusional central bankers. Click here to read on. Regards, James Woodburn,
Publisher, Fat Tail Investment Research | 