Welcome to another edition of The Daily Cut mailbag. I’m glad you joined us, because this is our best issue of the year…
We had just one simple question. But we got some great insights from all your favorite Legacy Research experts… including our founders – Doug Casey, Bill Bonner, and Mark Ford.
Let’s dive in…
Note: With so many experts on the Legacy team, we know it can be hard to keep them all straight. So, since we hear from almost all of them this week, we’re introducing a new feature to The Daily Cut mailbag… Starting today, each Legacy expert’s name will be linked to their full biography. All you have to do is click.
Reader Question: If one of your grandchildren came to you and asked for you to name the ONE investment you would put money into and leave for 30 years, what would you say?
This is for a paper for my granddaughter’s class in high school, but I am sure a lot of people would be interested in your thoughts. Thanks.
– Marty R. (Legacy Research member)
Dave Forest: Gold. It’s hard to say in 30 years where most investments will be: stocks, bonds, real estate (especially with all the global turmoil these days), even alternatives like crypto, etc. Gold has had value for 2,662 years, all around the world. It will hold up, and could do extremely well, if those other classes don’t.
Nick Giambruno: There is only one asset that I can be confident will, at the least, preserve its value for 30 years. That asset is gold, which has kept its value for thousands of years. Nothing else even comes close to standing the test of time. That is no guarantee for the future, of course, and 30 years is not an insignificant amount of time. Given what we know right now, though, I don’t see any alternative being superior.
A point of clarification: I am referring to physical gold in your possession. As the saying goes, “If you can’t touch it, you don’t own it.” While gold stands the test of time, banks, vaults, safety deposit companies, and other third-party custodians do not.
I prefer coins with a .9999 purity that have global recognition, like the one-ounce Canadian Maple Leaf.
Teeka Tiwari: Vanguard Total Stock Market ETF (VTI) – a low-cost broad market stock fund. It’ll outperform 75% of all fund managers at a fraction of the cost of a managed fund.
Bill Bonner: Well… you say “investment”… and that complicates things. I’d say that no investment is reliable over 30 years, with perhaps the exceptions of land/timber and things like that. Even they have their risks, of course. I am, for example, buying land in Nicaragua and betting that it will be more valuable in 30 years. But who knows?
Instead of an investment, I’d go with gold… simply as a reliable store of value. Most likely, it will become relatively more reliable and more valuable, simply because other stores of value – stocks, bonds, real estate – will prove to be very unreliable. The feds are going to inflate. What that will do to the economy and asset prices is unknown. But it probably won’t be good for anything other than gold.
Tom Dyson: I’ll go with gold too.
But as Bill points out, I don’t think it’s a useful exercise to pick a single investment for 30 years.
Jason Bodner: For me, it would be the S&P 500 – set and forget – it went up 10x the last 30 years.
If you can’t be bothered doing any legwork and research, just buy the index. And with dividends reinvested, the 30-year return of the S&P 500 was more like 1,582%. An extra nearly 600% for reinvesting those dividends. That works out to +9.82% per year for 30 years. That’s more than enough to cover the ravages of inflation and grow your principal.
But just know that according to Professor Hendrik Bessembinder, 100 years of stock returns show that 4% of all S&P 500 stocks account for 100% of the gains beyond Treasurys. And 1% of stocks account for 50% of the gains. So if you could sit and patiently research outlier stocks, and leave out all the laggards, imagine the returns then…
30 years is a long time.
Jeff Brown: I’d place the money into a fund used only for education for my children, or grandchildren. I can think of nothing else that would generate a higher return on investment. The days of going to school, getting a good undergraduate degree, and being guaranteed a nice career are over.
It may be uncomfortable to most, but the pace of technological change is now moving so quickly, it is impossible to go to school only once, be done for life, and expect to be current. The next 30 years will require new skills training every few years in order to keep up with the rate of technological change. Those with good careers will be those who were willing to regularly educate themselves, be flexible, and stay current with new technologies as they apply to their areas of interest. Those that will fail will be those that refuse to learn new skills, are inflexible, and are unwilling to adapt in this rapidly changing world. This kind of continuing education won’t be in the traditional format of a bachelor’s or master’s degree, but in the format of nano-degrees, or intensive boot camps designed to dive deep on a particular skill set related to work.
E.B. Tucker: Unfortunately, I’d have to recommend Berkshire Hathaway (BRK.B).
Since it must be an “investment,” I can’t go with gold or any reliable asset, which merely preserves wealth.
The past performance of Berkshire has nothing to do with my recommendation. That’s history. Also, Warren Buffett is irrelevant since he’ll be dead long before 2050, when my heir would judge the results of this decision.
Berkshire has incredible investment processes and systems in place to manage its roughly half a trillion in assets in the case Buffett dies tomorrow.
I’d rely on that team to “invest” for the next three decades, and my guess is they’ll at least put up an average performance.
Dan Denning: I’ll be boring and go with Exxon Mobil (XOM) as an energy/death-of-fiat-and-the-dollar-standard/scarcity play. It’s up 1,449% in the last 30 years, enough to turn $10k into $155k (with dividends reinvested) for an annual return of just under 10%.
If you look back to when LBJ removed the gold cover from Federal Reserve notes in March of 1968, the return is even more astonishing: $10k to $25 million. In a worldwide, secular devaluation of paper money against real assets, you’d want to be long energy.
Your risk is that in the coming breakdown of central banking and government financing (social order and civilization), the demand for energy plummets as globalization collapses. In which case, a more 15th-century-style investment would be a cabin in the woods, with lots of wood (the original oil).
Might also be worth looking at uranium companies. Cameco and BHP for publicly traded companies in markets with good legal regimes (probably won’t get nationalized).
But that’s assuming there isn’t a big breakthrough from cheaper energy (there might be). Those nuclear fusion tokamak reactors are pretty cool (General Fusion, Commonwealth Fusion Systems).
And thorium reactors are interesting too… most of the U.S. thorium resources are in central Idaho… meaning you could get into this double-wide fixer-upper near Lemhi Pass for less than $150k (thorium, the new shale).
By the way, XOM yields 5% currently. It used to have a AAA credit rating… but it was downgraded in 2016. Only J&J and MSFT (in the U.S.) have AAA ratings. 16 of the Dow 30 stocks currently have a yield higher than the 30-year UST (2.2%).
You could argue that certain high-yield global blue chips are much better long-term credit risks and bets than the U.S. government over the next 30 years. In fact, with a $23 trillion debt and the intentions to print more money and for the Fed to control the entirety of the yield curve, who WOULDN’T argue that?
Doug Casey: An impossible question. I’m afraid – certainly over 30 years –“investment” doesn’t exist in today’s world. If you’d asked me in the early ’80s, when rates were 15% and stocks were yielding 10% and the DJIA was 1,000, I’d have said what I said in Strategic Investing: “Buy stocks – the Dow is going to 3,000.” Not only was I off by 1,000%, but that was then, and this is now. Unless we have some type of WW3 event (which is likely). Even if we do, things are likely to evolve towards the Singularity, which will change everything. So perhaps the question isn’t just impossible, it’s possibly meaningless.
Bottom line? No stocks, no bonds, no cash. Buy some cheap rural property, and bury some gold on it.
But wait. The question is from a granddaughter. And what’s the most valuable thing you can leave her? Not some “stuff.” If you guess wrong, you’ll look foolish. Consider using the money to set an example – give her a chance to see how cool her granny was, so she always asks, “What would granny do?” when confronted by a situation.
Spend it on some outrageous and memorable adventure. It’s unseemly, at least at a certain stage of life, to try to gather more wealth. Memories and experiences are all you really own anyway. Try to get some good ones to give her.
Jeff Clark: It’s hard to argue with any of those answers. As an easy, logical investment, a low-cost S&P 500 index fund probably makes the most sense. But, I really like Doug’s response of spending it on a memorable adventure.
Perhaps the best combination of investment and adventure is to invest in one’s own business.
I’ve known lots of folks who ran their own businesses. Some were successful. Some weren’t. But no one regretted the experience.
Mark Ford: For me, it would be rental real estate. If that were not an option, it would be a low-cost index fund.
So gold is the clear winner…
And, as we said in Wednesday’s edition of The Daily Cut…
If you’re new to gold, start with common one-ounce coins.
Our gold industry insider, E.B. Tucker, has created this page as a starting point for his paid-up subscribers who are new to physical gold.
And he’s kindly agreed to share it with Daily Cut readers. (We do not get any compensation from Gainesville Coins for bringing you this offer.)
Next, you can move on to a few bars. For more on how to buy and store them, check out the special report from Doug’s team at Casey Research here.
That’s all for this week.
Enjoy your weekend.
Regards,
 |
James Wells
Director
P.S. Which recommendation would you take for a single 30-year investment? Write to us at [email protected] and let us know whose answer resonates most with you. We’d love to hear from you.
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