How to Cancel Short People

How to cancel short people?

Shrink the rulers.

How to silence voters angry about low wealth and high taxes?

Shrink the dollars.

Details are in my favorite comic book that demonstrates the threat of inflation to YOUR wealth kept in dollars:

Kingdom of Moltz

This book is just a comic book, so it has more pictures than words.

If you don’t want to read it, you can have it all read to you in this twelve-minute video:

If you cannot tolerate even a comic book read to you, then the politicians will shrink YOUR dollars.

Losing YOUR dollars would be a terrible punishment simply for not having a comic book read to you.

Small Outperforms Large

Yesterday, a fan asked why I prefer small stocks over large stocks. Small stocks generally outperform large stocks for at least two reasons:

First, small stocks have more world to conquer. A small business with only one customer can grow one thousand times if it finds one thousand more customers. A large business with seven billion customers will struggle to find one more billion customers.

Second, small stocks are more likely to be underappreciated than large stocks. Small stocks are generally less popular and attract less attention. Small stocks usually deserve the low price they fetch like most items at Dollar Tree, but some are diamonds in the rough. Large stocks usually deserve the high price they fetch like most items in a Lamborghini dealership, but buying a Lamborghini is usually a bad idea for most people who just want convenient transportation without style.

My best evidence that large stocks generally underperform small stocks is in a comparison of two ETFs: SPY and RSP. Both ETFs invest in the same five hundred stocks in the S&P500 index, but SPY has underperformed RSP.

< https://www.investopedia.com/articles/exchangetradedfunds/08/market-equal-weight.asp?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral >:
“The ETF of choice for the S&P 500 is the State Street SPDR S&P 500 (ARCA: SPY). The weight of a company in the index is equal to the market cap of that company divided by the total market cap of all the companies in the index. For example, as of December 2020, the largest constituent of the S&P 500 index was Apple (Nasdaq: AAPL) with a weight of 6.65% of the total index. The top ten constituents of the S&P 500 index comprised 27.2% of the index.”
“An equal-weighted index is just as it sounds. Every stock in the index has the same weight, regardless of how large or small the company is. Therefore, even Apple will have the same weight (0.2%) as the smallest company that is a constituent in the S&P 500. The Invesco S&P 500 Equal Weight ETF (ARCA: RSP) tracks the EWI and is the most commonly traded of the equal weight ETFs.”
“The S&P 500 EWI is rebalanced quarterly to coincide with the quarterly share adjustment of the S&P 500, which takes place on the third Friday of each quarter. Shares of stocks that performed well in the previous quarter will be sold and those that did relatively poorly will have to be bought to assure the equal weight, which is essentially a sell high, buy low strategy.”

You can see here that since RSP began in 2003, SPY has gone up by 347.66% but RSP has gone up by 459.72%:

https://drive.google.com/file/d/1CYGtstObgG2gyZkozTgc27VWimf6GHti/view?usp=sharing

IJR and VB are ETFs that invest in stocks smaller than the five hundred in the S&P500 index. IJR and VB has outperformed RSP since 2003:

https://drive.google.com/file/d/1EcYcq3WJshUZ23Ul7y1MZiCIHEVjbhQJ/view?usp=sharing

VSS has invested in hundreds of small companies across dozens of countries since 2009.
VWO invests in large companies in small economies. Because small companies outperform large companies, VSS has outperformed VWO.
EFA invests in large companies in large economies. Because small companies outperform large companies and because small economies outperform large economies, VSS has outperformed VWO and VWO has outperformed EFA:

https://drive.google.com/file/d/16vi3z5sQkXhncNF6713GNTL7EDbZYC5n/view?usp=sharing

My Advice to Most People in a Nutshell

FirstName LastName emailaddress@something.com
12:23 AM (5 hours ago)
to me

Dear Sir:
Given your impressive track record, I would desperately like help with investing.
I am ignorant of the stock market. My primary fear is hyperinflation given that: a) my wealth is in savings; and b) the Fed printing trillions from thin air will, IMHO, eventually lead to ruin.
My financial situation is as follows. I am nearly 64 years old. I am presently retired and receiving a defined benefit pension plan; I also collect SS. I have significant savings (app. $370K) with no debt whatsoever. I am single and without dependents. I live frugally.
Any advice which you could proves would be greatly appreciated.
In closing, thank you very much and keep up the good work!
Yours,
–FirstName

Alfred Horg
6:11 AM (1 minute ago)
to FirstName

My general impression is that your financial situation is not bad, but requires vigilance.

Are you physically able to work at all? I used to be a school bus driver and see that my former employer is currently recruiting and training.

I see at the following web site that you are financially better off than 69% percent of Americans assuming zero home equity:
https://dqydj.com/net-worth-by-age-calculator-united-states/

If I were single, I would live in a van and pay no rent or mortgage.

The safest way to protect your wealth is finding a piece of dirt that nobody knows about, then burying precious metals there. My favorite precious metal is now platinum because it is usually more expensive than gold, but now is cheaper. The downside of precious metals is that they do not grow.

If you believe that the world will not fall apart entirely, then stocks could be a good choice for you. I recommend to most people that they do not do what I do. They just cannot endure the volatility of owning individual stocks. An Exchange-Traded Fund (ETF) based on a stock market index would be better. My favorite ETF would be Vanguard’s VSS because Vanguard charges the lowest fees and allocates your investment capital across hundreds of stocks in dozens of countries:
https://investor.vanguard.com/etf/profile/VSS

Top Reason for Tax Deferral

If you maximize your employer match into your 401k, why should you contribute more? The short answer is “tax deferral,” but these two beautiful words are not beautiful enough for some beautiful people like someone I know whose name rhymes with “Mouse.”

Let’s say your pretax weekly income is $1,000 and 20% gets withheld and leaves you with $800 to take home.

Let’s say also that you need only $700 per week and can save $100 per week.

Let’s also assume that putting your $100 saving into an investment yields 10% (i.e., ten dollars) per year for you.

So far, so good. How can tax deferral improve this arrangement that is already promising for your financial future?

With a 401k, you can contribute $125 per week. Your pretax weekly income would decline from $1,000 to $875, but that is OK because after the 20% tax is withheld, you would bring home $875 * (100% – 20%) = $875 * 80% = $700, enough for you to live on.

And because tax deferral allows you to invest $125 per week instead of $100 per week, your investment would earn $12.50 per year instead of $10.00 per year. In other words, tax deferral would allow your investment to grow ($12.50 / $10.00 ) x 100% = 25% faster. If you are young (e.g. 25 years old), this will make a big difference over the remaining decades of your working life (e.g. 40 years).

1.100 ^ 40 = 45.26 <== tax deferral ignored
1.125 ^ 40 = 111.20 <== tax deferral used increases your eventual outcome by ((111.20 – 45.26)/ 45.26) * 100% = 145.7%

This vast difference is further enhanced if you take inflation into account. For example, annual inflation of 5% would reduce the real growth of your investment by 5% from 10% to 5%. But tax deferral would reduce the real growth of your investment by 5% from 12.5% to 7.5%. Here is what would happen to the benefit of tax deferral with inflation:

1.05 ^ 40 = 7.04 <== tax deferral ignored in an inflationary environment
1.075 ^ 40 = 18.04 <== tax deferral used increases your eventual outcome by ((18.04 – 7.04)/ 7.04) * 100% = 156.3% in an inflationary environment

The benefit of tax deferral grows vastly more when you consider the absence of taxation of capital gains and dividends inside your 401k.

Pacific Coast Oil Trust Litigation Begins Today

Litigation over Pacific Coast Oil Trust (ROYTL) begins today at 11 a.m. PST with a virtual appearance of the litigants at an “Initial Status Conference” in a Los Angeles courtroom.

Here are two court documents that contain arguments from all the litigants:

https://drive.google.com/file/d/1pAZTmoYroqUiM49fySe0MYTyiUO0oOfI/view?usp=sharing

https://drive.google.com/file/d/1Yiil-Qs-QMLiCCm7W5saMpcxy6dGQPXM/view?usp=sharing

For your entertainment, you can follow the comments at the ROYTL message board.

Zero Progress in 3.92 Years

On February 10, 2017, I triumphantly announced a new high of $721,715.92 in the Horg family’s stock portfolio.

I lost half my triumph by December 31, 2018 when the Horg family’s stock portfolio declined to $355,632.79.

I recall our stock portfolio declining further to around $250,000 during the March, 2020 COVID-19 crash.

But as of yesterday, the Horg family’s stock portfolio achieved a new high of $740,339.88.

I make these observations mainly to point out how fickle markets are. My track record with investing in stocks is now 14.15 years long and I have achieved a CAGR of 15.29%. But the labor market tells me that I am most productive driving a concrete mixer truck while fund managers that are paid millions lag index funds.

I must look a lot dumber than I really am.

Opportunity in the Crisis?

MUX traded yesterday at 63 cents:

mux200313

 

The last time that MUX traded at 63 cents was in the week of October 27, 2008:

mux081027

 

MUX then got up to $9.43 in the week of April 4, 2011 (1,397% gain in under 2.5 years – a 195% annual gain):

mux110411

 

MUX got down to 65 cents in the week of July 20, 2015:

mux150720

 

MUX then got up to $4.74 in the week of July 4, 2016 (a 629% annual gain):

mux160714

 

I had to reallocate a bit toward MUX yesterday:

mux200313buys

Cheap and Quick Defeat of COVID-19

The headlines do alarm me, so I now have a modest stockpile of canned food and water. I will go to Costco this morning, and fill my cart with toilet paper and more water. Maybe you ought to do the same.

COVID-19 seems to have a death rate of about two percent. It harms children less and older adults more. In any case, politicans everywhere are taking action to show how much they care. Somebody somewhere will eventually announce a vaccine and a lot of people will celebrate (especially the maker of the vaccine that the politicians approve). Make of it what you will, but I would rather lick the street in Wuhan than accept a COVID-19 vaccine.

So why read on? Because I did once expose myself to a terrible biohazard, became terribly sick, and took a cheap and painless remedy that allowed me to recover in just three hours.

Through 2010, I was a typical believer in vaccines and accepted the recommendations. Through 2012, I got influenza from time to time and had to spend a few hours barfing and a couple of days groaning in pain. I used to think that was normal.

By 2012, I had wised up and followed the podcasts of a “Robert Scott Bell.” I became familiar with the ability of colloidal silver to thwart microbial infections, and I purchased this product:
https://www.amazon.com/Sovereign-Silver-Bio-Active-Hydrosol-Support/dp/B00OTZK0Z2/ref=sr_1_6?crid=1L4IDQY6022V3&keywords=sovereign+silver+colloidal+silver&qid=1583064645&sprefix=soveriegn+silver%2Caps%2C152&sr=8-6

In 2012, I began to feel the influenza digging its claws into me one last time. I began to lose energy. My muscles began to ache. I became very sensitive to hot and cold water in the shower. I was dreading spending the next two days in agony. So I tried the colloidal silver. I filled half my mouth with it and held it under my tongue for thirty seconds to get the silver into my lymphatic system, then swallowed it. I did not have much hope, but thought that Robert Scott Bell could be right.

Three hours later, I couldn’t believe it. I felt like I had travelled forward in time by two days. I was still weak, but realized that I had skipped the worst of the influenza. I have not gotten influenza since 2012, probably because I have avoided vaccines since 2010.

But colloidal silver would save me one more time in 2013 in a bigger way. In 2013, I drove a dumpster truck and got stuck in a muddy trash dump on a cold, rainy day:

I brought no rain protection because I expected that blasting the heater would keep me warm. BIG ROOKIE MISTAKE. The heater fan broke. I spent the day in trash dumps cold and shivering. I was unhappy, but not miserable just yet. The misery would come in the following days as the effect of my exposure to the trash dumps became apparent.

WARNING: The following description is biological and a bit embarassing for me, but I tell you to save yourself from the same embarassment.

So after my exposure to the trash, I felt the beginnings of influenza setting in again. My muscles ached like I expected, but I experienced a new symptom: I became very sensitive to the smell of chemicals. I used a towel that was clean, but was cleaned in a cheap chemical detergent. The chemicals made me feel even sicker. I think my sensitivity to chemicals at that time is what pregnant women experience.

Then I barfed liked I expected. Then I got diahhrea like I did not expect. My muscle aches got so bad, that I considered going to a hospital. I had never considered going to a hospital before for an infection, but this time I was. This is saying a lot for a guy like me who not only fears spending money on the American health care system, but also fears the effects of antibiotics.

The sympoms set in quickly and painfully, but I decided to delay a trip to the hospital in order to give the colloidal silver a chance to work. It worked. Three hours later, I got the pleasant surprise that I got in 2012. I felt like I had travelled two days into the future. My muscle aches eased significantly and I stopped barfing. I was still very weak and would not regain my strength for a few days. But here is the disgusting part: SPONTANEOUS AND SUDDEN AND UNSSTOPPABLE DIAHRREA.

During my recovery on two different occasions, the stuff just oozed out voluminously even though I clenched as hard as I could. Luckily, I was close to a bathroom both times and was not wearing expensive clothing.

So I recommend colloidal silver before COVID-19 gets to you. If it works for you, please share, like, follow, and comment.

COVID-19 harms lungs, but you can use a nebulizer to get colloidal silver in there. Colloidal silver and a nebulizer has helped my children when they suffered from a severe cough.

Also, I must tell you that colloidal silver has helped us only in cases that are SEVERE. It does not help with minor ailments like sniffles.