- By Bill Bonner
Where do we begin? With how to add wealth? Or how to lose it?
The way to lose it is simple enough. You buy something that is not worth the money you spend. You are instantly poorer, whether you know it or not. That is what is happening to stock market investors. The assets they bought were not worth the money; now Mr. Market is letting them know.
Yesterday, the Dow sold off, down to 16,001. Next stop, 15,000. “It's a bear market," says Jim Cramer. It will be a “bloodbath," says Carl Icahn.
We don't know. But our prediction is that ten years from now, your stocks will be worth no more than they are now.
The biggest losers yesterday were in the commodities and biotech sectors. Remember those yellow machines we told you about? Well, Glencore is one of the companies not buying them. The commodities giant has lost 77% of its value so far this year. And if commodities prices stay at these low levels, it could be worth nothing by the end of the year.
Biotechs dragged the Nasdaq down yesterday. But the sector is still up more than 500% since 2009. Plenty of room left on the downside, in other words.
Carl Icahn, by the way, seems to have signed on as an advisor to Donald Trump. This is a good thing; the presidential hopeful needs advice. He unveiled his tax plan yesterday, too. It looked good to us, with a top rate of 25%. You have to give Mr. Trump credit. Few pros, aspiring to the Oval Office, would dare a major overhaul of the tax code. Over the years, every pig in America has muscled up to that trough. A more conventional candidate wouldn't take them on. But Mr. Trump is refreshingly naive in many ways. He often doesn't know what he's talking about; he hasn't been thoroughly coached by the cronies.
But let us turn from how to lose money to how to make it.
We left Paris early this morning. It was still dark. It's that time of year. The days grow short...and damp...and dwindle down. The sidewalk was slick with decaying leaves. The hint of approaching death makes the dying autumn days especially rich, like the last bites of a favorite desert. And over Paris this morning shone a ‘super moon' that must have set hearts yearning for something...
But what? For romance? For love? Pity the poor, tin heart - like an empty trash bin -- that looked at that full moon, lighting up the slate roofs of Paris, and wished for money.
And yet, money is our beat here at the Diary. And we will stick with it. But money means nothing without philosophy. Beyond what we need to survive, money has no importance. Is it good? It is bad? It depends. We need a simple philosophy to make sense of it...to guide us past the Gucci bags, past cable and past the million-dollar apartments of the 16th arrondissement. Not that there is anything wrong with them. But they are expensive. And if you don't have money, you need to be able to pass up luxury, gluttony, and self-indulgence with your nose in the air, not with your shoulders bent in defeat and self-disgust. And for that you need philosophy. Or at least aesthetics.
All people - unless they are saints or mental defectives - want to feel good about themselves. That is their primary aim in life and the only reason they are interested in money (save the minimal amount for survival). Since we are a competitive species, we feel good about ourselves in direct measure as we feel superior to those around us. If we are trim, it does no good unless those around us are not. If we are smart, we get no advantage from it unless others are dumb. And if we are rich, it is only meaningful to the extent that others are less rich.
But so clever is our race that we are able to find superiority almost everywhere. if we are fat, we redefine the corpulent spectrum so that we are ‘pleasingly plump' while others are ‘unhealthy' and ‘too thin.' If we are dumb, we focus on our ‘common sense' as opposed to the uncommon nonsense of the ‘pointy-headed intellectuals. ‘ (To borrow a phrase from George Wallace.) And what if we have no money? Then, spending money is vulgar, shallow, and pointless!
One person feels superior because of what he owns. Another for what he does not. Still another for what he knows. And another for what he knows not. And one feels superior from who he is, while another measures his stature in who he is not. But the one who feels superior to them all is one who owns nothing, knows nothing and is a complete nobody. He is free from the vanities that clutter others' lives!
In the 10th century having little became very fashionable. People gave up their possessions in search of a life of contemplation. They wanted to get away from the distractions and temptations of everyday life, so they could live in a purer way...in simplicity and godliness. So great was the demand for poverty that the monasteries and convents could scarcely keep up with it. They had to build new ones all over Europe.
But there is no need to insist. We just need to recognize that there are people with little or no money who live well. And there are people with a lot of money who live badly. Our goal will be to live better. And we will take as a challenge and a point of pride, to do so without spending money.
We will have less, but we will treasure our frugality as a man might value a collection of old cars or well developed biceps. Then, as our days decline, our appetite wanes, and our energy subsides with the tide of life, our treasure of nothing increases, for we will need less and less. A bed. A book. A candle. What more could we want?
Yes, we are talking about a program of radical deprivation and happy pennilessness. Our goal would be to feel superior to rich people...without having any money. In fact, we will wear our newfound love of poverty and a badge of honor...and use it to get rich!
Already, we pity them. The rich. In our empty coffer, we have the greatest treasure of all - the hope of happiness. Yes, dear reader, blessed be the poor. For they enjoy the gift of ignorance. They still believe that they could be happy...if only they had more money!
This, of course, is an illusion that only the poor can afford. Rich people know better. They have too much money. They know money cannot buy happiness. That's why the suicide rate in Aspen is four times the national average.
But the lucky poor. They still have hope! They might win the lottery. They might get a raise or a better job. They might inherit money from a rich uncle. Money is always close at hand. So, happiness must be too...only a funeral or a lottery ticket away.
More to come...including the practicalities...how DO you get more money?
Publisher's Note: Vivek Kaul, the India Editor of the Daily Reckoning, just made a bold call - Real Estate prices are headed for a fall. Well, if you are someone who is looking to buy real estate, or is just interested in the space, I recommend you read Vivek's detailed views in his just published report "The (In)Complete Guide To Real Estate". To claim your copy of this Free Report, just reconfirm your Free subscription to the Daily Reckoning...
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.