Grow Your Portfolio the Intelligent Way

Meet the New Face of Anti-Capitalism  

Move over Alexandria Ocasio-Cortez, there’s a fresher, younger face replacing you as the poster child of anti-capitalism. Her name is Greta Thunberg.

Ms. Thunberg is the newest high-profile global climate change warrior. On Monday, the 16-year-old Swedish activist addressed the world via the United Nations Climate Action Summit. There, she gave the following condescending statements:

“You all come to us young people for hope. How dare you? … You have stolen my dreams and my childhood with your empty words, and yet, I’m one of the lucky ones. People are suffering. People are dying. Entire ecosystems are collapsing.”

A tearful Thunberg continued her scolding of world leaders, saying, “We are in the beginning of a mass extinction and all you can talk about is money and fairy tales of eternal economic growth. How dare you?”

Climate activist Greta Thunberg, photo courtesy of Shutterstock

Ah ha! There it is, the real culprit lurking behind this pro-climate façade — the evils of money and eternal economic growth. 

Now, this is The Deep Woods, which means we peel back the outer layers of an issue’s onion skin to get into the core of what principles are animating thoughts and actions. Here, I think Ms. Thunberg is a mere tool used by those whose real agenda isn’t trying to make the climate safer; it’s those who think “eternal economic growth” is somehow the real existential threat to humanity.

Now, I do not doubt Ms. Thunberg’s sincerity. I suspect she fully believes in what she’s saying. And, I am not going to argue about the science of global climate change, as I am willing to concede for the sake of argument that the planet is warming and that human activity is the cause. I don’t know that to be true, but I am willing to stipulate it could be true.

The question then is how best to combat that kind of challenge. Do you set out to have governments around the world use physical force to compel humanity to curtail eternal economic growth?

Or, do you opt for a technological solution to the problem that’s motivated by the desire to solve problems — and to make a profit while doing so?

As a free-market warrior and defender of profits, technology, human ingenuity and capitalism, the political/economic system that best fosters these virtues, you know my answer to this question. Yet perhaps an analogy here would help illustrate the viewpoint even better.

If the world were facing a global famine, what would be the better solution: Tell people to reduce their caloric intake by half so that you make the scarce supply of food last, or employ technological solutions to help grow more crops, raise more livestock and create new sources of supply?

The answer is obvious. Yet, unfortunately, the same logic isn’t applied to climate change issues.

In a new piece at Reason.com, editor-at-large Nick Gillespie writes the following regarding these alternate ways of addressing this issue:

“There are only better and worse ways to deal with coming changes. Contra Thunberg, the better ways don’t demonize economic growth as a problem but as a solution. ‘The most inexorable feature of climate-change modeling isn’t the advance of the sea but the steady economic growth that will make life better despite global warming,’ writes science journalist Will Boisvert. The environmental Kuznets curve, by which countries get wealthier and their citizens demand a cleaner environment, is the rule, not the exception. Such a dynamic is predicated upon economic and technological innovation that would be almost impossible under the sort of regulations promulgated by Green New Dealers and activists such as Thunberg…”

The environmental Kuznets curve referred to here basically says that once a country’s per-capita income reaches a certain elevated level, its citizens begin to demand such values as cleaner air, cleaner water, etc. According to the theory, widespread economic growth does initially hurt the environment, but after a certain level of growth takes place (i.e. growth that makes a country richer), that country can focus on correcting any environmental problems. 

Another way to say this is that countries that get richer — and the only way to do that is via capitalism — can focus less on the basic necessities of life and more on loftier issues. 

The converse of this is that countries with less capitalism, more government control and less economic growth will not get rich enough to begin caring about this issue. And, anyone who has been to a second or third-world country will know precisely what I am talking. 

The bottom line here is that the only real solution to technological problems such as climate change (assuming that it is, indeed, a real problem) are technological solutions. And the only way to foster and promote technological solutions is to cultivate a climate conducive to those solutions — a climate where profits are justly sought and where innovators can be rewarded for their efforts.

In other words, pursue a political climate change toward more capitalism and more economic growth and away from those who would like to curtail eternal economic growth. 

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ETF Talk: This Inverse Fund Is Intended to Rise When U.S. Fixed-Rate Bonds Fall 

The Direxion Daily Total Bond Market Bear 1X Shares (SAGG) is an inverse exchange-traded fund (ETF) that is intended to rise when an index of investment grade, U.S. fixed-rate bonds falls.

In market conditions in which the bond market is dropping, this fund is designed to have positive returns of similar magnitude. SAGG will allow investors to more directly bet against bonds than ideologically correlated investments such as stocks. 

However, I do not recommend holding shares of this fund for the long term. This fund has not performed well in the most recent 12 months. In fact, it is down nearly 6%, as bonds have risen in the same period. 

Shorter time periods than the past 12 months do not look much better for SAGG, except perhaps for the last month, when it rose slightly. The expense ratio of 0.49% makes this fund a little on the expensive side to hold, much like many inverse ETFs. It does, however, pay a 1.84% dividend.

The fund’s assets under management total nearly $3 million. This puts it below my recommended threshold for investment, but the fund’s strategy is nonetheless interesting. The ticker symbol seems to refer to AGG, the large and very liquid iShares Core U.S. Aggregate Bond ETF. You can think of SAGG as a way to “short AGG,” since the two funds have opposite strategies based on the same index.

Chart Courtesy of StockCharts.com

This fund is not very liquid, so it may be advisable to use limit orders to trade it. The average spread currently sits at 0.44%.

If you think the bond market in the United States is headed for pain sometime soon, Direxion Daily Total Bond Market Bear 1X Shares (SAGG) may be an investment worth investigating.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

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The Fascinating Path of a Righteous Warrior

Want to hear a true story of international banking intrigue during the Vietnam war? 

Well, then I’ve got just the thing for you, courtesy of the latest installment of the Way of the Renaissance Man podcast

In this episode, I speak with precious metals expert Michael Checkan, president of Asset Strategies International. 

Michael is a hard-money warrior and someone who has been in the precious metals business for more than half a century. During this conversation, you’ll learn all about the work Michael did for Vietnamese refugees to help them start new lives in the United States.

(Photo Credit: Unlock Your Wealth TV)

You’ll also find out how Michael assisted these refugees in converting their golden “Taels” into U.S. dollars — dollars that allowed them to make America their new home. 

Plus, find out Michael’s current views on the latest run higher in gold prices, the tailwinds propelling gold’s price and why it makes sense for every Renaissance Man to consider owning some physical gold in his portfolio. 

I loved this conversation with Michael Checkan, and I know you will, too. 

To listen to this episode of the podcast, simply click here right now

For more about Michael and his firm, please visit Asset Strategies International

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McGuff Wisdom 

“It is more important to know what sort of person has a disease than to know the sort of disease a person has.”

— Doug McGuff, “The Primal Prescription: Surviving The ‘Sick Care’ Sinkhole”

One of my favorite thinkers in the field of exercise science is Dr. Doug McGuff. I highly recommend his book “Body By Science,” co-authored by John Little, as it is the absolute best book on exercise I’ve ever read on how to properly train your body for maximum muscular development, strength and cardiovascular fitness. In this quote, Dr. McGuff reminds us that if we want to treat an ailment of any sort (medical, psychological, even financial) it’s more important to know the person who has the problem rather than knowing about the problem itself. 

For example, if you are a person who has a problem saving enough money, it’s not the lack of savings that’s the problem, it’s your spending habits. Whatever problems you have in life, the solution starts with knowing what kind of person you are. Often, changing bad habits that lead to a problem is a more effective solution than simply treating that problem’s symptoms. 

Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. Click here to ask Jim.

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