“We are all working together; that’s the secret.” — Sam Walton
Judging by the daily financial news, we are all “headed to hell in a handbasket” as my dear, sweet mother is want to say.
Unemployment is up stuck above 8%… Consumer confidence is at a 10-month low… The average net worth per family is down some 40% from five years ago… The Eurozone is falling apart… The housing markets in Canada and Australia are crashing… And China has massive inventory it can’t sell.
Must Be Time to Buy
Baron von Rothschild, an 18th century British nobleman and member of the Rothschild banking family, is credited with saying, “The time to buy is when there’s blood in the streets.”
He was in Paris after the defeat of Napoleon at the Battle of Waterloo.
When there were riots in the streets and the rich were fleeing the city, he was asked what he would do…
He said he was buying Parisian real estate for pennies on the dollar.
His interviewer protested that there was blood running in the streets, to which Rothschild replied that’s the only time you can buy so cheap.
This tale goes down in Wall Street lore as “buy when there’s blood in the streets — even if the blood is your own.“
It is the battle cry, war anthem, and rebel yell for us contrarian investors.
The investing mantra is simple…
Buy low and sell high.
I’ll be straight with you; I’m an idiot and I get confused easily. I want my investment opportunities presented such that a five-year-old can understand them.
I keep my investing plain, and the number one metric to determine if an asset is cheap is simple: Everyone else hates it.
Right now, there is nothing more hated than equities.
Seriously, take a fast poll of your friends. Ask them if they are putting money in stocks…
Nine out of ten of them will say no, it’s a scam, they took all my money, bunch of thieving bankers, etc. — which means we are within two to four years of a buying opportunity like 1981.
Here is the Dow Jones Industrial Average chart going back to the start of time:
As you can see, bull markets and bear markets last one generation (or about 16 years).
The flappers took the Dow up in the 1920s. The Okies brought it down. The silent generation boosted it again… The hippies killed it. The yuppies drove it higher in the 80s and 90s… The hipsters rode it under.
One generation makes money, the next gets killed and will put their money under the mattress.
We are living in that sideways market, in the generational bear. It will take a new generation to drive the market higher.
The good news is we are close to that.
In 1981 — just 31 years ago — the Dow Jones Industrial Average was at 1,000. It is now at 13,131.
That’s a 1,213% gain. And all of that occurred between 1981 and 2000.
You also saw a 1,000% gain from 1943 to 1964 and from 1921 to 1930.
A 1,000% gain from now would put you at 131,310. Call it crazy, but it’s historically accurate…
Dow Fury
The Dow Jones Industrial Average is made up of 30 large blue chip stocks that attempt to represent the American corporate landscape.
It was created by Charles Dow in 1896 for his newspaper the Wall Street Journal and co-named for his business associate, the statistician Edward Jones. It is second in age only to the Dow Jones Transportation Average, also created by Dow.
The companies in the DJIA range from aluminum producer Alcoa (NYSE: AA) to energy giant ExxonMobil (NYSE: XOM). Intel (Nasdaq: INTC) is in there — I’ve been telling you to buy since it was at $16 and paid an 8% dividend — as is McDonald’s (NYSE: MDC), Walt Disney (NYSE: DIS), and Bank of America (NYSE: BAC).
What I find fascinating is how many good companies there are and how well they are doing.
These are incredible stocks that you never hear about on CNBC or Bloomberg…
Mickey D’s: Burgers Taste Good
Chevron: Oil Makes Money
Home Depot: Housing Bust? What Housing Bust?
IBM: Their Computer Beat Alex Trebek
Perhaps the best stock of all time is Wal-Mart:
I must admit I’ve been a huge fan of Wal-Mart since I read Sam Walton’s biography more than a decade ago…
Walton was a vicious cost-cutter.
They said he named his store Wal-Mart instead of “Walton Mart” simply because it would save three letters on the signage.
He drove a 1979 Ford F150 and never bought a new car. Sam once quipped, “What am I supposed to haul my dogs around in, a Rolls-Royce?”
Each of his children rank in the top 20 on Forbes’ Richest People list.
Fifteen years ago, you couldn’t talk about stocks without Wal-Mart entering the conversation. The stock went from $0.05 in 1972 to $72.83 today. It made truck drivers and shelf stockers millionaires.
But as happens with the best of companies, it became over-valued. And despite what you may have heard, some bubbles don’t pop; they just deflate slowly over the years.
For the last decade Wal-Mart has done nothing but trade in a range from $43 to $65 — that is, until a few months ago…
The stock just broke out of its trend. There is a 10-year coiled spring waiting to unleash bullish energy.
This stock is starting to hop.
And while I think Wal-Mart will be 30% higher at this time next year, there are other, safer plays with higher potential…
Publisher and owner of Angel Publishing Brian Hicks has uncovered one company that rents retail space to Wal-Mart across North America. That’s right — Wal-Mart pays them money.
Learn more about this company today.
All the best,
Christian DeHaemer
Check us out on YouTube!Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
