Steve Sjuggerud: This is the real secret to my success
From The S&A Digest:
… Steve Sjuggerud launched True Wealth in 2001. Steve’s track record of finding safe, unconventional investment ideas with huge upside for his subscribers has made him one of the most popular and trusted writers in our industry.
In today’s Digest, Steve writes about his philosophy of focusing on “The One Critical Thing” that guides successful decisions in investing…
What’s my secret?
Friends at home in Florida think that I have some sort of “Golden Touch.”
They want to know my secret to repeatedly making great investment decisions.
Usually, I just shrug off their questions without much of an answer. “Just good luck,” I’ll say. Or something like that.
The thing is, I do have a “secret” that helps guide my investment choices. Even better, it is not hard to understand or to put into action. Today, I’ll show you what I do… And I hope you will always remember it.
My friends at home have seen me succeed over and over again. Usually, it appeared from the outside that what I was doing was a bit crazy. I wasn’t. I was simply following the secret…
- My friends looked at me like I was crazy in the mid-2000s. Back then, they were all buying real estate. I was buying gold coins. As you can guess, my friends were clobbered in real estate, but I came out ahead.
- My friends know that when the financial world looked like it was ending in 2008, I took out a home-equity loan to buy stocks. (That was the first and only time I’ve ever done that.) I doubled that money pretty quickly and used those profits to pay off that loan. I’ve been saying to “buy stocks” ever since.
- In recent years, I’ve been buying large properties in Florida for 80%-90% less than what they sold for at their peaks. It’s already working out well… One of these properties – a few hundred acres – is currently listed for a price more than five times what I paid for it. (That price was suggested by the realtor, not by me.)
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So what is my secret?
I call it the “One Critical Thing.”
My secret to success is figuring out the One Critical Thing… and investing accordingly.
Most aspects of life have One Critical Thing that’s the key to success… at least. (Some things have two or more Critical Things.) The trick is finding that One Critical Thing and sticking with it.
Take golf, for example… Golf has a few Critical Things, like:
- Don’t swing too hard/keep your head still.
- Don’t take big risks.
If you simply do these two things, you can become an extremely good golfer. I’m sure of it.
Finding that One Critical Thing can bring you a bit of peace and clarity. Most people get bogged down by too much noise and advice, and most of it is not that helpful.
When you start to feel bogged down and overwhelmed, just return to the Critical Things. Chances are you’ll come out ahead.
Human nature is a funny thing, though…
Even when we know these Critical Things… even when they are obvious… we still want to fight them. Go back to the golf example. We want to bend these rules, test them, take them to their limits, and ultimately break them.
We want to think that this time is different. It is not.
So what I want to find are these Critical Things – both in the markets and in life.
Today, I will share with you a few Critical Things that I think are moving the markets and will continue to move the markets. Sticking to these ideas is how I make my money.
The way I make the biggest money – by far – is when human nature gets in the way… when people think the Critical Thing no longer matters. That happened in the three examples I gave at the beginning of this story. When I see people forget about what matters, I simply bet that the Critical Thing will end up mattering after all. It’s simple.
Let me share a few simple examples with you today…
When Porter Stansberry talks about the End of America – the idea that America’s debt-addicted economy is going to create dire consequences for our way of life – I agree with him.
Some people find that surprising given my bullish stance on the stock market. But at the heart of it, the only thing we differ on is timing…
You can get lost in all the aspects of what our government is doing wrong to destroy our country.
Or you can boil it down to One Critical Thing.
To me, the Critical Thing to remember here is, you cannot spend more than you make forever.
It’s common sense. But like I said, human nature often gets is the way. The following chart sums up all I need to know…
The chart shows that U.S. government spending on entitlements (health care and Social Security) will eat up ALL government revenues very soon.
The chart is a graphical depiction of what I believe is The Critical Thing for our government.
If you want to fix the country, fix that chart. Simple. That is The Critical Thing.
In the stock market, the Critical Thing has been the Bernanke Asset Bubble…
This is my idea that the U.S. Federal Reserve will keep interest rates lower than anyone can imagine for longer than anyone can imagine. And that will drive asset prices (like stocks and real estate) higher than anyone can imagine.
This is The Critical Thing.
Amazingly, the Federal Reserve is trying to revive the housing market as well. “Although we work through the financial markets, our goal is to help Main Street, not Wall Street,” Federal Reserve Chair Janet Yellen said last month. “By keeping interest rates low, we are trying to make homes more affordable and revive the housing market… ”
People have been continuously worried about the stock market and the housing market. Can they hold up? My opinion is, yes. That’s because our Critical Thing – the Fed and its interest-rate policies – isn’t going away for a while.
I do have concerns…
My biggest concern is The Critical Thing in the bond market…
Right now, high-yield “junk” bonds pay less interest than ever in recorded history. This scares me.
You want to invest when junk-bond yields are high – like they were in 2002 or 2009. When junk-bond yields are high, that usually means investors are scared. So you can often find incredible investment bargains, if you’re bold enough to buy.
On the flip side, you typically start getting worried when junk-bond yields are low. And right now, they’re really low. Here’s a chart of junk-bond yields, so you can see what I mean.
The Bernanke Asset Bubble has been the right Critical Thing to believe in over the last few years. I believe it still has room to run…
However, other signs – like my Critical Thing in the bond market – tell me we are getting into the later innings of the Bernanke Asset Bubble. I think we’re around the seventh inning in this great bull market… and often the biggest gains come in the final innings.
You can’t forget about the first Critical Thing I shared though, either… You can’t forget about government spending on entitlements. The trajectory there is terrible, and it’s hard to see an end in sight. With this one simple chart – with this one Critical Thing – Porter’s End of America thesis looks like a near certainty.
So adding up just the few Critical Things I shared with you…
Since the Fed hasn’t changed its policies, the Bernanke Asset Bubble is still in play. But junk bonds are giving us a warning that we are in the late innings. And in the long run, government spending on entitlements will force us to face Porter’s End of America thesis.
That’s three critical things that significantly shape my world view.
I try to find these Critical Things in everything I do… both inside and outside of the office.
I suggest you spend your time focusing on finding the Critical Things that matter in what you do… and try to tune out the rest.
Doing so has made me a wealthy man… and it allows me to sleep easier as well, with fewer things cluttering my brain.
P.S. Last night I talked in much more depth about what I see in the markets today… and shared the three “Critical Things” that I’ve used to generate 52% gains in my current open portfolio. This live event is over, but it’s not too late for you to benefit from this information. Click here to get all the details.
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