Ray Dalio is the CEO of Bridgewater Associates, the largest hedge fund ever, by a wide margin from second place.
His wisdom is the result of what I term "Calculated Trial and Error."
Studying his achievements, I learned that starting from the kitchen of his apartment in NYC in the early 1970s, he began placing "bets," or trades he had perceived would be profitable, but he took one additional step. He began tracing his mistakes, learning from them and back-testing his conclusions—nowadays, his computers can run simulations going back decades, and even centuries.
That's how he was able to avoid repeating many costly mistakes, and it's the reason why he pioneered many of today's best risk vs. reward strategies.
It is impossible, useless, and hopeless to become an expert on many subjects. That lesson has been reaffirmed countless times.
The stock market allows you to become the partner of the best businessman in the world—no convincing is required at all. It is the magic of the open market.
It's the reason behind the motto I've coined for my own ventures:
Our strategy is to avoid mistakes committed by others in the past at all costs and to build relationships with the most accomplished and proven experts—those, whose track records and not their mouths, speak for them. We chose to focus on the most ballistic sectors: mining, cutting-edge technologies and cannabis legalization.
Small-cap investing requires becoming an expert of people, more than anything else. It will take you forever to become a master of geology, raising funds, structuring a shell company correctly, staking out assets, negotiating, motivating a team, attracting quality management, and learning countless other skills needed to make a fortune in mining.
The alternate route is to cut this unreasonable task into a workable investment plan by narrowing down your lens to studying existing leaders—the top dogs.
The most important factor driving gold and silver stocks up and down is the fact that national currencies are not backed by gold.
In terms of purchasing power, holding gold over currencies has absolutely been the best option, but the nominal price has changed constantly since 1971.
This has major implications. Unlike during the gold standard days, when miners could easily figure out the value of their precious metal assets, today's miners see the price of their assets fluctuate immensely, and these swings turn the table between profitability and losses.
This process is outside the realm of their control, therefore the boom and bust cycles have become much more volatile than ever before.
Here's how you should look at this. In the 1940s, the price of one ounce of gold was $35, so the company mining it could simply sum up the costs of their operations and figure out its profitability. Investors could also easily evaluate the value of the mine.
Today, the value changes daily, as the bottom line is affected by market players and, many say, by rigging the price of precious metals.
Next week, we will boil down the various stages in the life cycle of a typical mining company, and how to analyze and research methodically and scientifically, as well as the timing factor behind buying right and advanced strategies that we ought to constantly be utilizing.
Tom Beck is founder of Portfolio Wealth Global. Known as one of the first millennial millionaires in the United States, Beck is a relentless idea machine. After retiring two years ago at age 33, he's officially come out of retirement to head up Portfolio Wealth Global. He brings a vision of setting a new record for millionaires with his seven-year plan to accelerate any subscribers' net worth who will commit to the income lifestyle. Beck delivers new ideas on the marketplace that were once only available to the rich. Traveling the world, he's invested in over a dozen countries, including real estate.
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1) Statements and opinions expressed are the opinions of Tom Beck and not of Streetwise Reports or its officers. Tom Beck is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Tom Beck was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
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