Most Investors Fail… Try This Instead

And so…fast away the old year passes. In a few hours, it will be gone.

And then what?

Another one is born, without so much as a moment’s delay.

Better? Worse? Who can say?

We are watching the year die in the waiting room of the Department of Motor Vehicles in Delray Beach, renewing a driver’s license.

This has nothing to do with our mission, which is trying to connect the dots in the world of money. But it’s an experience!

What’s your number?’ asked a fellow condemned man.


Well, you got 50 people ahead of you. They just called 218. I’ve been here two hours… and there are still 30 people ahead of me.

I don’t understand why they can’t do this by Internet. You can order a pizza or watch a movie. Why can’t you get a damned driver’s license?

We didn’t have a good answer. But our companion was not looking for answers. Just conversation. Mostly, his own.

I moved down to Florida 10 years ago. To tell you the truth, I’m thinking about going back to Cincinnati. Too many old people around here. I’m one of them. But you put too many old people together in one place and it begins to smell funny.

He laughed heartily.

Honour roll

Recently, Mark Hulbert of the Hulbert Financial Digest newsletter reported the latest results.

Since March 2000, he has been tracking the investment advice given by a group of 78 independent newsletters, including a few published by our company.

We are proud to report that two of our investment services, once again, made Mark’s ‘Honor Roll’ of the investment advisories with the best returns and the least risk: Byron King’s Outstanding Investments and Alex Green’s The Oxford Communiqué.

But here is the interesting thing. Both Byron and Alex have been analysing stocks, full time, for many years. They are among the best in the business, according to Hulbert.

What is their average annualised rate of return?

About 8% a year.

Even the top performer on Hulbert’s 14-year list has done no better.

Consumer price inflation has averaged about 3% a year so far this century. So this turns an annual nominal 8% return into a 5% real rate of return.

If this is the best you can get from the best-performing investment services in the nation, what do most investors get?

Not much.

How to get rich

We have been talking about value investing as a sensible and proven approach to making profits.

We want to back up a bit and warn readers that investment gains are not guaranteed, no matter what technique you use.

The untutored, inexperienced investor faces long odds. Mr. Market is a tough competitor. Even most full-time professionals cannot keep up with him. And the best only beat him by a hair.

Owning and controlling a business is a much better way to make money.

As a general rule, the closer you are to the source of earnings, the more you are likely to get. When you control a business, you make sure you get your share of the profits. When someone else controls the business, he often makes sure you don’t.

Owning your own business brings you more than just the annual profits. You also can get employment, use of company cars and real estate, and a business credit card to cover some of your expenses. You get invited to the company holiday party, too.

And if you pay attention, you understand how the business works and what it is worth.

This is different from the passive owner of a few publicly traded shares.

He is at the mercy of the insiders, the managers, and the honchos. Unless he does his homework, he is unlikely to understand either the source of the company’s profits…or the disposition of them.

When a business goes public, the entrepreneurs, insiders, managers and venture capitalists who backed it in childhood and adolescence sell it off to total strangers.


Maybe they need the money. Or maybe they just believe it’s not worth as much as buyers are willing to pay.

Maybe they want to retire. Maybe they’ve had enough. For whatever reason, the shares change hands — from those who know them well to those who don’t.

More to come in 2015…


Bill Bonner,
For Markets and Money

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Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.

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