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Economy , Finance , Investing

Only A Fool Would Sell Now. (I Guess I’m A Fool)

January 12, 2018


“Suppose you were an idiot, and suppose you were a member of Congress; but I repeat myself.” -Mark Twain

That’s one of the jokes I like to tell my good friend, who is a former US Congressman.

I won’t mention his name, for obvious reasons, but let’s call him ‘Tim.’ I usually have a “beer and pizza night” a couple times a month with him.

Basically, we meet up and talk about how we’re going to solve all the problems in the world. Of course we don’t have the answers to most of our concerns… but it’s still fun to talk about it all.

One of the things we talk about is how Tim is going to achieve his life goal. He wants to make $100 million and then donate it all to charitable foundations.

Considering that Tim did NOT take a multi-million dollar job after his political career (unlike most politicians), his goal is going to be especially difficult.

Nonetheless, we still debate about how he is going to get to his $100 million.

At our last “beer and pizza night” a couple weeks ago, Tim told me the story of how his grandfather survived the 1929 stock market crash.

Tim’s grandfather had invested several thousand dollars into the stock market in the early 1920’s. By the beginning of 1929, his original investment had swelled to $29,000 (adjusted for inflation, that’s worth just over $400,000 today).

This incredible growth actually terrified Tim’s grandfather. So, in the spring of 1929, he sold all of his stock market investments.

At the time, he was ridiculed and called a fool. People were telling his grandfather, “This is the time to make real money!” And, “This is how the the new economy works! Only a fool would sell now!”

Of course, in hindsight we know exactly what happened.

Source: MT


During the great depression, Tim’s grandfather was living like a king. With his $29,000 he was able to keep his family fed, stay in the same house, and even hire full time help.

I asked Tim, “How did your grandfather know to sell all of his stocks?”

Tim said, “My grandfather had always been a savvy businessman. He was never really wealthy before investing in the stock market, but he had a record of running successful businesses. When the stock market started to go higher and higher each day in 1928, he started to get a weird feeling. He knew that it wasn’t normal to see such explosive returns, because he had never seen that in his personal businesses.”

“Ok…” I said, “But this was really the first big crash in the stock market. How did your grandfather know it was going to crash?”

Tim replied, “He didn’t know it was going to crash. He didn’t know what was going to happen. But, just because it was the stock market didn’t make it any different. My grandfather had seen all kinds of booms and busts – the stock market was just another variety of the same.”

Now, if we were to be truthful with ourselves, do we think that markets (or personal investments) should go up forever?

Of course not.

Just like Tim’s grandfather, I have a ‘weird feeling’ about our stock market and especially the cryptocurrency market.

Does that mean that everything is going to crash tomorrow?


However, just as I told Explorer Partnership members last week, “Nobody has ever gone poor by taking profits.”

If you’re sitting on massive gains from stocks, bitcoin, or Beanie Babies, don’t be afraid to sell some.

Not only will you be locking in some profits, but you’ll be creating some personal liquidity that you can reinvest in the next ‘thing’ that’s undervalued right now.

We’re currently working on two real estate opportunities that qualify as that undervalued ‘thing.’ I’ll be sharing those soon…

Oh, by the way, check out what the historical Down Jones chart looks like right now (not adjusted for inflation or log-rhythmic):

Source: MT