The real meaning of a “blood in the streets opportunity”… Why Doug Casey jetted off to an African civil war… Secure your spot for tomorrow night’s Totally Incorrect premiere…
When we left you yesterday, we were pulling back the curtain on the investing strategy that made Legacy Research cofounder Doug Casey several fortunes.
You’ve likely heard the phrase, “The best time to buy is when blood is in the streets.”
It simply means that a crisis often allows you to buy a dollar’s worth of assets for a dime or less.
And it’s the strategy that has made Doug so much money over the years.
In short, Doug is a crisis investor. He buys when panic is in the air… and a full-bore crisis has battered prices down to bargain basement levels. And he sells after prices rebound again.
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Take his trip to Rhodesia in 1979.
That’s the old name for the country now called Zimbabwe in Southern Africa.
Rhodesia was an independent state that took over from the British colony of Southern Rhodesia in 1965.
And in the 1970s, its mainly white government found itself pitted in a civil war against two African nationalist guerilla groups that wanted to end white minority rule.
The so-called Rhodesian Bush War was mainly fought on the ground. But in 1978 and 1979, the guerillas upped the stakes when they downed two civilian airliners using surface-to-air heat-seeking missiles.
But Doug isn’t like most folks.
In 1979, he flew into war-torn Rhodesia on an investment scouting trip.
Here’s how he recounted the experience…
On the ground, it was like a scene out of the movie Mad Max… soldiers, homemade armored vehicles, danger and confusion everywhere. If you were in a window seat on a night flight, you were told to pull down the shade to reduce the risk of anti-aircraft fire hitting the plane.
I was perhaps the only foreign investor there. I was absolutely the only person there when I visited Victoria Falls. Although, two weeks before, another mazungu [white person] visitor had been killed by a potshot taken by a Zambian soldier from across the river.
When I flew into the Zimbabwe ruins, where I was again the only visitor, the plane dipped close to treetop level several miles before landing in order to avoid possible rocket and small arms fire.
After he landed, Doug took a minibus across the country, hoping to avoid both the guerillas and the Rhodesian Army.
He kept asking locals what he should see while he was there. And he kept hearing about the Leopard Rock Hotel. So, that’s where he headed next…
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As Doug described it, Leopard Rock was a “fantastical luxury hotel.”
Here he is with more…
It had a dozen enormous suites, oversized fireplaces, crystal chandeliers, broad terraces, miles of horseback trails, a nine-hole golf course, and 200 acres of garden with vast mountain views and 50 acres of coffee trees.
This was actually the first international property deal mentioned in my Crisis Investing newsletter, in the first issue – November 1979.
At the time, it was available for $85,000. Several colleagues in the investment business said I was crazy for even mentioning such a risky proposition. Six years later, however, it sold for about $13 million. So, that would have been a nice hit.
In the 1970s, uranium was in a bull market, thanks to the greater use of nuclear power.
Uranium jumped more than tenfold – from $3 to $43 per pound. Meanwhile, stocks in some uranium mining companies shot up by a factor of about 100.
But two nuclear power plant failures – at Three Mile Island in Pennsylvania in 1979 and at Chernobyl in Ukraine in 1986 – caused uranium prices to tank.
And these triggered a vicious bear market. From a bull market high of $43 per pound, uranium prices had plunged 78% by the late 1990s.
But again… not Doug.
In the October 1998 issue of his International Speculator advisory – with the bear market still in full swing – he wrote a 16-page report on the uranium crisis.
As he pointed out at the time, the bear market had left the cost of producing uranium for many companies higher than the price they could sell it for.
Miners were producing uranium for about $18 a pound. But they could sell it for only about half that amount. So there was little incentive to increase or maintain production.
Doug knew that if this went on, supply would eventually choke off… and prices would have to snap back.
So he recommended several uranium stocks, including an Australian penny-stock uranium miner, Paladin Energy.
By 2007, the price of uranium had shot up to $130 per pound from its bear market low of $8 in 2001. And shares in Paladin Energy skyrocketed from a penny to more than $8 – a gain of more than 86,000%.
But that wasn’t Doug’s last great contrarian call…
As you may recall, starting in 2012, banks there started to fail due to exposure to toxic Greek government debt.
This dragged down the Cypriot government, which had its own government bonds downgraded to “junk” status by the credit rating agencies. (Junk bonds carry a high risk of default.)
So Doug decided to fly there with his globetrotting protégé, Nick Giambruno, to see if there were bargains on offer.
They met with a number of companies that traded on the Cyprus Stock Exchange (CSE). And even though the index for the CSE had plunged 98% from its peak, Doug and Nick liked what they saw on the ground… and made seven recommendations to our paid-up Crisis Investing subscribers.
Most folks thought it was crazy to invest in Cyprus at the time. But Doug and Nick knew that maximum pessimism creates the best buying opportunities.
When the crisis passed, six of their seven recommendations had turned into double- and triple-digit winners. They went as high as 61%… 97%… 171%… and even 214%.
And the one loser of the bunch went down just 8%.
Over his 50-year career as an international crisis investor, he’s visited 155 countries… some of them several times over.
He’s lived in 10 of them – including Hong Kong, Argentina, and Uruguay.
And along the way, he’s witnessed more foreign crises than anyone outside the intelligence community.
And as we mentioned yesterday, he literally wrote the book on the subject. In 1979, he shot to fame after writing the New York Times No. 1 bestseller Crisis Investing.
But as we’ve been telling you, Doug believes the next crisis investing opportunity will not be in Zimbabwe… or Cyprus… or Argentina.
It will be here at home… when what he calls America’s “Everything Bubble” bursts.
He’ll also reveal his five crisis predictions for 2019 and beyond… and share the top crisis investing play for each of those predictions.
You can tune in tomorrow night at 8 p.m. ET.
Just be warned that Doug is going to ruffle some feathers during tomorrow night’s live broadcast.
Frankly, Doug’s forecasts would get most folks in the mainstream press in trouble for publishing them.
In fact, as Legacy Research publisher Amber Mason put it in her note at the top of yesterday’s dispatch, we’re no strangers to folks asking for refunds because they’re offended by some of Doug’s ideas.
So if you’re easily offended, it’s best you don’t tune in. If you think you can handle it… discover what Doug has to say here.
As regular readers will know, there’s been plenty of mudslinging in The Daily Cut mailbag lately between folks who favor more capitalism as the cure to America’s woes… and folks who believe we should give socialism a chance.
In the latest debate, your fellow readers weigh in after reader Kenneth S. blamed the U.S. education system for not doing a good enough job of pointing out the benefits of capitalism…
When Kenneth says, “America’s educational institutions have failed miserably at teaching the masses about the opportunities of capitalism and how it’s supposed to work,” it should be noted that those institutions, mostly staffed as they have been for 60 years with radical leftists, have been actively hostile to the capitalist economic model for many decades.
How can we expect that they’ll even be able to objectively and effectively teach it? For that, and other even more important reasons, not only America, but all of Western civilization will ultimately fall into the abyss of a Huxleyan totalitarianism. The outlook for reversal is not only bleak, but impossible.
– Daniel S.
Our education system has failed miserably, not only has it failed to teach about capitalism, liberty, freedom, and personal responsibility, it has done the opposite. It has indoctrinated and brainwashed and blinded three or four generations to turn against what made this country great!
– Timothy L.
Socialism has never worked in the history of the world and the verdict on capitalism is still out. What we really need is some form of benevolent capitalism, whereby decisions are made not only for remunerative reasons but also for the greater good.
Only generational change can make that happen. We, children of the greatest generation, have done a terrible job. I am 74 and ready to hand over the reins to a future generation.
– Barbara S.
Capitalism vs. socialism oversimplifies the problem… which is exactly the way big corporations and the Feds want it. Truth be told, crony capitalism is corporate socialism. THAT is what all of us should be fighting against.
Whether red or blue is in charge, it won’t change a thing for big corporations. Until we capitalists are ready to fight against big corporations AND big government, we deserve all the socialism we get.
– Mike B.
Have you signed up for the premiere of Totally Incorrect: LIVE tomorrow night? Tell us what you’re most looking forward to hearing from Doug at [email protected].
Regards,
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Chris Lowe
March 26, 2019
Dublin, Ireland
IN CASE YOU MISSED IT…
Set an alarm for 8 p.m. ET tomorrow…
In the world premiere of Totally Incorrect: LIVE, legendary speculator Doug Casey will go on record with what could be the five biggest predictions of his career. Plus, you’ll get details on five new speculations that could deliver 1,000%+ in the next year.
You won’t hear this from the mainstream talking heads… Reserve your spot right here.
