The so-called experts will say one thing… but do another. If you want to be a successful investor, you need to know one thing. They’re all liars.
You can’t buy a degree in finance without sitting through a few lectures on the father of modern investing. We’re told Harry Markowitz is a genius. His Modern Portfolio Theory was supposed to give us more return with less risk… Wall Street’s version of paradise.
I had a professor who would blush anytime his name was mentioned.
The only problem is — and it’s a big one — Markowitz doesn’t use his own theory. He’s got a chapter in every one of my old textbooks… yet even he won’t put it into practice.
It’s like a president who wins a Peace Prize and drops bombs on Libya, Afghanistan, Iraq and Pakistan… crazy, huh?
In a decade-old story for Money magazine, Markowitz spilled the beans.
“I have half of my money in stocks, and I’ve got half of my money in bonds,” he said. It was almost the exact opposite of the theory he spewed across academia.
A year later, The Wall Street Journal called him on his contradiction. His response was laughable…
“I visualized my grief if the stock market went way up and I wasn’t in it — or if it went way down and I was completely in it,” he said. “My intention was to minimize my future regret.”
One word… fraud.
This guy virtually invented the business plan of every financial advisory firm in the country, yet when it comes to his own money… it’s do as I say not as I do.
Thanks to Markowitz, we hear it all the time: Diversify.
But what does it mean? Should we follow the steps of this so-called expert and split our financial fate 50/50? Or should we step outside the convention and let the academics and shysters have their neat little pie charts?
You know my answer.
Diversification does not mean grab a handful of blue chips, a few small caps and a couple of stiff bonds. All we have to do is look back three years to see the fallacy in that plan.
What we need to do is diversify our strategy.
Stocks and bonds are great. I own a bunch.
But I also have a stake in a small business. I get royalty income. And I own land. In other words, if Wall Street crumbles… life goes on.
If you are a Safe Haven Investor subscriber, you already know why I like land so much (you also know the best place in the world to buy it right now).
Land is one of the easiest and safest ways to diversify. With one transaction, you can own a low-risk asset anywhere in the world… in any currency.
In western Iowa, for example, a new record was broken last Wednesday. A 74-acre chunk of farmland sold for $20,000 per acre… the highest price yet.
The same day, one landowner sold a parcel for $10,450 per acre… twice what he paid for it just two years ago.
If you followed in the steps of Markowitz — an equal cut of stocks and bonds — you’re missing out on what is one of the largest opportunities of the next four years.
The bottom line to all of this is you have been fed one lie after another. On Wall Street and in Washington, they’re preaching… but they ain’t practicin’.
They tell us (and sometimes force us) to do one thing, while they do the opposite. Once you understand their game, you can get out of it.
Tomorrow, we’ll blow the cover on the ETF scam.
Editor’s Note: The Associated Press just released a story that shows why 2011 was one of the best years ever for American farmers. Their profits spiked by nearly 30%. With an opportunity this big, I’m willing to bet your local senator couldn’t resist the temptation. To see what I’m talking about… follow the link.