I’m writing this week’s mailbag from the Legacy Research Big Idea conference in Miami Beach.
If you haven’t heard us talk about it before, I’ll catch you up…
Every spring, all the Legacy Research experts and executives gather together for a few days of closed-door brainstorming. We talk about the biggest investment ideas on everyone’s radar for the coming year… and figure out the best ways to help you profit from them.
Teeka Tiwari’s crypto research… Jeff Brown’s 5G opportunities… Jeff Clark’s “Earnings Season” options strategy… These are just a few of the Big Ideas that got their start at our Miami sessions.
It’s too early to talk about what we discussed this year, but I can promise that you haven’t heard about any of it anywhere else. So stay tuned…
And now, for this week’s mailbag…
First up, a question about the Fed from probably the youngest reader in the Legacy Research audience. Since few people in our group have written more about the Fed than Dan Denning (The Bonner-Denning Letter), we turn to him for an answer.
Reader question: I am 13 years old and am currently writing an essay titled “Should We Abolish the Fed.” I am quite in favor of that. Do you have any facts and figures I could use?
– Russell K.
Dan’s answer: There are some great books about central banking and the Fed… What Has Government Done to Our Money? by Murray Rothbard. The creature from Jekyll Island by G. Edward Griffin is also excellent.
But I suspect you are asking for some numerical proof that the Fed has done a poor job. You can find plenty of that. A chart showing the history of the purchasing power of the dollar since the inception of the Fed. Or inflation-adjusted comparisons between items.
But for me… I’d look at how many wars the U.S. has fought and won since the inception of the Fed. Arguably just one: World War II.
As a lender of last resort to the government (buying bonds if it has to) and custodian of a fiat money system, the Fed is the backbone of the permanent Warfare/Welfare State. Without fake money, you couldn’t afford to be at war all the time and with everyone.
Gold = peace.
These ideas might get you kicked out of school or put on a watch list. But there you go!
To add to Dan’s list, you should also read the essay Legacy cofounder Doug Casey wrote after Jerome Powell was nominated Chairman of the Fed.
Moving on, a bearish question for our most bullish expert – Jason Bodner (Palm Beach Trader).
Reader question: The next few years it’s possible we can see a recession or crisis. In this case, how will it affect PBT [Palm Beach Trader] trades? Thanks.
– Ricardo D. (Legacy Research member)
Jason’s answer: Hi Ricardo, and thanks for your question. Recessions and crises speckle history. They happen cyclically, and we can certainly expect them in the future.
As for when? That I can’t say.
But I will say I like what I see in terms of strength in the economy and growth of equity prices, earnings, and sales. I am bullish on stocks and openly vocal about it.
As far as long positions, you should take appropriate action if you fear a recession or crisis.
I, for now, do not anticipate these events soon. And we’ll likely notice irregularities in institutional trading before they happen, as the smart money typically moves ahead of the news. That’ll give us some advance warning, and I’ll be watching.
That advance warning system has Jason’s subscribers sitting on 14 winners and only six losers… with an average gain of 20%.
Now, out of respect to Jason’s paid-up subscribers, we can’t share the names of those stocks. But we can do something almost as good…
We’ve unlocked a free recording of Jason naming five “outlier” stocks that are up an average of 50% since he revealed them. That compares to a gain of just 6% on the S&P 500 over the same timeframe.
We’ll be moving Jason’s presentation back behind our paywall on Sunday to make room for another “Best of 2018 Legacy Investment Summit” presentation. So don’t wait too long to watch it.
Moving on… a faithful follower of Nick Giambruno (Crisis Investing and The Casey Report) has a concern about the future of cannabis investing…
Reader question: I have a question regarding what seems to be the inevitable legalization of cannabis and all the money we are going to make investing in it.
I have seen very few comments about the supply-demand dynamic. Isn’t the supply potential virtually unlimited? If supply exceeds demand, pricing will be problematic.
I have read that, in California, high taxes have resulted in poor legal sales and a resurgence of the underground market. The same source said that the warehouses are filled with years of product they are unable to move.
– James H. (Legacy Research member)
Nick’s answer: This is a legitimate concern. As a practical matter, just about anyone can grow a marijuana plant on his back porch.
That’s why you need to be very selective about the kinds of cannabis companies that you own. I’m only interested in companies that have a sustainable competitive advantage.
One area where I see tremendous opportunity is in cannabis oils.
It’s not easy to produce cannabis oil with the consistent quality necessary for medical and other products with standardized dosages.
Cannabis oil extraction takes a lot more money and know-how. This isn’t something any old hippie farmer can do.
Even with the right expertise, it takes millions of dollars and possibly a year or more to even think about starting a cannabis oil extraction facility on a commercial scale.
So I’m focusing on companies in this space. I have three of these companies in the Crisis Investing portfolio that focus on processing and extracting cannabis oil for both medical and recreational products. They are already up 50%, 138%, and 599% since I recommended them to my readers, and I expect them to go much higher in the months ahead.
For our final Q&A, we revisit a question from last week’s mailbag…
Reader question: Please explain to me why Bitcoin has any value when it is backed by nothing more than the U.S. dollar is… faith in the issuer. Please explain to me why Bitcoin should have any more value than any other fiat currency. Yours truly, curious.
– Vern P. (Legacy Research member)
You may remember that Legacy Research cofounder and crypto skeptic Bill Bonner (The Bonner-Denning Letter and Bill Bonner’s Diary) gave us a surprising answer. [Catch up here if you missed it.]
Well, this week we have a different answer to that same question. But this time, we turned to someone who’s as deep in the crypto trenches as you can get… Teeka Tiwari’s right-hand man, Greg Wilson (Palm Beach Confidential and Crypto Income Quarterly).
Greg’s answer: Cryptocurrencies and bitcoin are the future of money, which is just a social contract between individuals to convey value.
Over history, various items have been used as money. And as money has evolved, so has our ability to conduct business with one another.
Cryptocurrencies are just the next step because they have characteristics that make them exponentially better than fiat money.
Cryptos are…
Decentralized – Trust is taken out of the hands of centralized authorities.
Borderless – You are no longer constrained by arbitrary geographic borders.
Open and permissionless – Anyone can use cryptocurrencies. At the same time, no one has to use them if they don’t want to. It’s completely opt-in.
Censorship resistant – You maintain control of your funds. And your transactions cannot be arbitrarily reversed.
Neutral – Computer code treats everyone the same.
The important thing to remember is that money is a social contract between individuals to convey value.
And it can be anything we agree upon, whether it be the U.S. dollar or bitcoin.
That’s all for this week. Have a nice weekend.
Regards,
James Wells
Director
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