“An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.” – Benjamin Graham, The Intelligent Investor
Central banks have never had this much control of the market before. The Fed has now joined the European Central Bank in buying corporate debt, while the Bank of Japan and Swiss National Bank continue to buy stocks. It is only a matter of time until the Fed joins them. In a world where the free market no longer exits, where interest rates can only go negative and where worldwide currency collapse seems imminent, is there room for “investments?”
Benjamin Graham’s The Intelligent Investor is one of those books that every budding investor wants to read. It is a good book, I appreciate the facts and figures, the data and the advice and considered a must read, but the best thing about the book is this:
It shows you exactly what cannot work in this day and age.
The book does a great job of chronically life as it was in the 20th century, when interest rates were strong and bonds meant something, but those days are long gone. Especially for a young person, they cannot simply look at “fundamentals” because fundamentals as they existed in the last century no longer exist today. We are in a world where speculation is the name of the game, where savings are bad, debt is good, and traditional strengths of a company such as cashflows and profit are not as important as hype and hoopla such as “clicks” and “subscriptions.”
The average young person doesn’t have the time nor the patience to wait for the market to find an equilibrium, to return to normal, or for price discovery to be found. Central banks have destroyed the market and the world economy is running on borrowed time. What worked for Benjamin Graham and Warren Buffet worked then, but will it work in the 21st century?
Hard assets, gold, silver, (maybe crypto), land, guns and anything else that you can hold on to, plus speculative bets in the stock market is the best way to play this century. If the US dollar made it to the 22nd century it would be nothing short of a miracle.