Stocks fell a little yesterday – led by biotechs.
Otherwise, the markets were relatively calm.
So, we dip into the mailbag for a little sharp pain:
‘There’s Bonner…the brilliant thinker and superb writer…a free market guy…an Austrian…a libertarian…a capitalist. All good.
‘And then there’s the guy who turns over the reins of his business to the most unsavory characters who relentlessly and obnoxiously promote ways to get rich by trading in the casino, war profiteering, and chasing after miracle cures. It’s unseemly.
‘You tell me…who’s the real Bill Bonner?’
This is Bill Bonner, at the Agora Swiss Night, a $200-a-night hotel in Lausanne. We are traveling on business — visiting friends, colleagues, and associates in Germany and Switzerland.
It is 7:30am. We have to write our Diary before our meetings begin so that Chris (in Berlin) can correct our errors and send it on to Florida where Will, Amber, James, Dana, Sheila, Tony, and the rest of the team there can put in their advertising links and send it out to subscribers.
The real Bill Bonner doesn’t know exactly what each and every of those advertising links will offer. But he believes they are savoury. And he trusts his team in Florida to make sure that’s the case…
But ‘savoury’ doesn’t mean the same thing to everyone. The word suggests it is a matter of taste.
The real Bill Bonner
The real Bill Bonner has his personal tastes — which, when it comes to money are stoic…almost ascetic.
He wears blue jeans he buys at Kmart for $10. (Comment from his wife: ‘They look like $10 jeans.’) He drives an old Ford F-150 pickup.
He doesn’t understand options or derivatives or currency trading strategies and is distrustful of almost any system that promises ‘alpha’ (the returns you make above the market’s returns due to your stock picking or market timing skills). The market is hard to beat.
But he also knows that other people are smarter than he is and often make a lot more from their investments than he does. And he knows that many of the analysts working at Agora have outstanding track records of beating the market over time.
Also, other people (including his own family members) have very different tastes, different objectives, and different ways of trying to achieve them.
What’s more, he knows that his business has to sell something.
We get a lot of criticism for what we sell and how we sell it. Most recently, the magazine Mother Jones took a whack at us.
This is bound to be more about our business and Bill Bonner than you, dear reader, want to know. But the real Bill Bonner wrote a response to Mother Jones:
‘Your writer, Tim Murphy, has given me far more credit than I deserve.
‘His article on “Agora” was meant, I think, to show how easily conservatives are bamboozled and what a scammy company I run for taking advantage of them. As the person who started the business 37 years ago, I take responsibility for what we have become. But it is not what your writer thinks.
‘First, some gross misinterpretations. The “25-bedroom chateau” in France? It’s not my private house. It’s a training center for our writers. We have hundreds of writers all over the world. We operate in 10 different countries and six different languages. We have to train people somewhere.
‘And that “premier goat cheese producing” farm in Maryland? That is a joke. We tried producing goat cheese on the family farm. Didn’t work. Gave it up 20 years ago.
‘More important, you badly misinterpreted the SEC case against Porter Stansberry. Which was an easy mistake to make. Even the courts were confused. A Maryland court agreed with us. Then the SEC came, and the case, on the same facts, went against us. Few people understood what it was really about. One of the exceptions was the New York Times, which recognised that it was really a First Amendment case and came in on our side, with an amicus brief. Mother Jones might have come in on our side too, if you had known about it.
‘We have some of the best financial analysts in the country. Porter is one of them. He saw Fannie Mae and Freddie Mac going broke, for example, well before other analysts.
‘When the SEC goes after someone, you think they must be trading on inside information or “pumping or dumping” stocks. Porter did neither of those things (as the SEC admitted). He was charged with the novel offense of claiming to have inside information and not really having it. He reported what he was told by an insider at the company…who later denied it. I’ll bet that happens to Mother Jones, too.
‘Incidentally, but importantly, our group does not allow trading on the investments we recommend. It is the highest standard in the financial press; our analysts work for our readers, not for their own trading accounts.
‘Then there is a silly thing about “Truth in Advertising.” The group challenged some of Porter’s claims. Your reporter says Stansberry took down the claims. True. But he should have also reported that we put them back up, as soon as we were able to verify them. The claims were true.
‘But the big error Mr. Murphy makes is to fail to understand what “Agora” is. Again, it is no shame not to recognise it; it took me decades. “Agora” is not a company in the ordinary sense. It is more of a collection of companies, some of which I have an equity interest in and some I don’t.
‘That is not just a technical point. We publish from the ground up, not the top down. We publish what our editors, analysts, and independent publishers think is true and important.
‘On the financial side, we warned against the crash of the dotcom sector in 2000 and against the mortgage finance debacle of 2008. And we published Dr Robert Atkins when no other publisher would touch him.
‘The New York Times had called him a quack. The American Medical Association had threatened to take away his medical license. But one of our publishers thought he was on to something. And as it turned out, he was. His low-carb diet is now widely accepted as beneficial to many people.
‘The fasting recommended in our “Biblical cure” sales letter may turn out to be helpful, too. Some people believe in it strongly. And what do I know? In the absence of certainty, I would prefer to “put it out there” and let readers make up their own minds. Which pretty much describes how we do business.
‘To make a full confession, the thing that caught your reporter’s eye — the “Biblical” cure for cancer — caught my eye too. From the beginning we taught our copywriters to be bold. “Words ought to be a little wild,” said Lord Keynes on the subject, “for they are the assault of thoughts on the unthinking.”
‘But a cure for cancer in the Bible? Maybe this was a little too bold. Maybe even pandering to people who weren’t thinking at all? I don’t know. But we are extremely reticent to censure our analysts and writers. Instead, we encourage them to speak boldly. And let readers decide for themselves.
‘Of course, we will be wrong often. And embarrassed occasionally. For example, we were dead wrong when we warned readers to watch out for the “Y2K” computer glitch that we expected in January 2000. And we’re still waiting for the credit meltdown that we first predicted in 1993.
‘Fortunately, our customers don’t pay us to be right. And we’re certainly not paid to be timid. Instead, we’re expected only to be diligent and honest, and to explore the unconventional, the often disreputable, and always edgy shades of the idea spectrum. And our customers have the last say. If they don’t like what we offer, they don’t buy. And if they change their minds they can get their money back.
‘Finally, there’s nothing particularly “conservative” about us. In 2003, the “conservatives” cancelled in droves when we warned that the Iraq war would be a mistake. Nor do they appreciate our analysis of the stock market boom of 2009 to 2015; it is the “grandest larceny,” we point out, stealing from the middle and lower classes in order to reward the rich.
‘Left? Right? They both think we’re nuts.’
We have not heard back from Mother Jones.
So, let’s move on…
America’s ‘secret police’
Yesterday put us in the company of Swiss bankers. One of them had this comment:
‘We survived World War I, World War II, the instability of the 1960s, inflation of the 1970s, the fall of the Berlin Wall, the credit crisis of 2008, QE, and now negative interest rates. But FATCA [legislation requiring foreign banks to provide extensive information on their clients to the US] is killing us.
‘We have to turn away all clients with any US contacts, even if they’re not US citizens. Because if they have contact with the US, they may owe tax in the US or be subject to the SEC. We could be attacked by the IRS or the SEC without doing anything wrong.
‘This is all very strange, too. I deal with people from all over the world. Many of them — say, the Italians and Argentines — take it as a point of honour not to pay their taxes. But Americans pay. They actually want to pay.
‘They try to pay. But it’s not easy. If you’re an American — or a green card holder — and you have a lot of business and investments around the world, you have to pay in the local country and also in the US And it can be hard to figure out what you owe to whom. A lot of people try to escape and dodge. But my US clients come in and they say, “Just tell me what I owe, so I can pay it.”
‘And yet, the IRS has an office here in Zurich. Imagine that. A foreign country has a tax collection office in our city. It’s crazy. And I don’t think it is just about collecting taxes. FATCA is about collecting information. They need to know everything about everybody…like the secret police in East Germany during the Cold War. They want to know everything. I think it gives them power. Information is power.
‘You remember what happened to DSK [Dominique Strauss Kahn, the former head of the IMF and French presidential candidate, who was arrested in New York and tried for attempting to rape a hotel cleaning lady]. You could read between the lines of that case. It was obviously a setup. They knew his weakness. They set him up.
‘I imagine that’s the real goal. They will know everyone’s weakness. They’ll be able to get rid of anyone. I know I sound like a paranoid. But otherwise, this FATCA doesn’t make sense.’
For Markets and Money, Australia