In a new book about investing a character in the book says to his friend, an investment banker, “I love your yacht… but where are your customers’ yachts?” He’s basically saying I see you made yourself rich, but what about the people who take your advice? Are they getting rich too?
The big investment banks have been building lies for the last two years. They put millions of dollars into sponsoring financial media. Now it’s spread to the economics teachers in our colleges, to the moderators on financial TV programs, everywhere. The irony is these investment banks definitely know this is a lie – just look at what they do with their money. It’s nothing like what they tell you to do with your money.
They have these -know-nothing ‘advisors’ that they send to herd you into their corral. You got to ask yourself, does Goldman Sachs or Morgan Stanley consult these ‘advisors’ about what to do with their money? Of course not. They’ve got guys actually doing the research, doing the real work, finding the best companies – and getting the best terms. But there isn’t enough of that good stuff to go around, and they need to do something, something they can sell to millions of customers.
So they’re telling you basically that you’re too dumb to do what rich guys do. And what these banks do with their money. That is, they provide capital to the greatest businesses on the planet. And they secure great terms. And they can leverage. So what do they tell you to do? They tell you to buy an index fund, and make a few percent a year. The advantage is it doesn’t take any brains. And you can never be totally wrong. But you also get nowhere fast.
But you see the beauty of our American system is you can invest in a dominant company that can’t lose, like Alphabet (that’s Google’s parent company) and Microsoft. And you can invest a few hundred or a few thousand or a few million in the same company. They don’t tell you about that. They’re keeping those ideas for themselves. They’re telling you that you need to diversify. Not only that, but you can get great terms like they get.
This is why the best and brightest from all over the world fight and die to bring their kids to America. That’s why my grandfather came here on a freezing boat from Russia 100 years ago and lost two kids on the boat. And when my beautiful wife came to America from the Philippines basically with just the clothes on her back to get access to American opportunities. So they’re telling you to diverse don’t pick out the best companies on planet. Buy into some fund they sell that’s got hundreds of companies in it. You’re too dumb to actually have a strategy and to pick a business to invest your capital in.
Sorry to say this, but with all due respect, you are proving that you’re exactly what they think you are, by listening to these guys. I saw this motto on a Morgan Stanley wall 30 years ago. It reads, “It’s amazing how much trouble people will go to not to think”. It’s a famous Wall Street saying, and that’s what they think of you.
You see if you buy into a fund with hundreds of companies in it, you can’t be totally wrong. And they’re teaching you to play prevent defense and therefore avoid the fear of making a mistake. Don’t aim for victory… just try to avoid a big loss, and you can even male maybe six or eight percent a year. Truth is, you’ve got capital that great businesses want and need. Some of them are willing to offer you terrific terms with massive leverage. That’s what these guys do – are they really that much smarter than you? Or did they just get the information before you did?
Now, understand, these guys don’t work at the companies they invest in. They pick out the best opportunities in the world. They arrange terms with massive leverage. And they let the 1000s of people at these companies do the work for them. You can do exactly the same thing, with just a little brain power. Right now these big hitters are not worried about Chairman Powell, or Biden or the GDP. They’ve got plenty of time. And they starting to put a lot of money in the nuclear energy industry (I’ll discuss that in my next podcast). By the way, why not subscribe to my YouTube channel right now? YouTube is free, and it will change your family’s life forever. And that’s encourage other smart people to sign up. For now, thank you very much for reading this, and I’ll see you next time.