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Please note: The Frank Talk articles listed below contain historical material. The data provided was current at the time of publication. For current information regarding any of the funds mentioned in these presentations, please visit the appropriate fund performance page.

This Self-Made Billionaire Reminds Americans that Only Capitalism Creates Wealth
September 10, 2018
Mapping the belt and road initiatives progress

“Capitalism works” is how Ken Langone, billionaire co-founder of Home Depot, opens his new book, I Love Capitalism!: An American Story.

“Let me say it again: It works! And—I’m living proof—it can work for anybody and everybody…. Show me where the silver spoon was in my mouth. I’ve got to argue profoundly and passionately: I’m the American Dream.”

Last week, I had the privilege to attend the Cornerstone Macro Conference in New York. Langone’s presentation, moderated by Omega Advisers CEO Lee Cooperman, stood out as one of the highlights.

Growing up poor in Roslyn Heights, Long Island, the son of a plumber and a school cafeteria worker, Langone didn’t initially seem destined for greatness.

Mapping the belt and road initiatives progress

But like other self-made billionaires, Langone didn’t let his humble background stand in the way of his ambitions. Married with a toddler and another baby on the way, he quit a good-paying insurance position to try and make it on Wall Street—a “closed, Waspy world back in those bad old days,” as he describes it in I Love Capitalism

He managed to get his first Wall Street job, in institutional sales at broker-dealer R.W. Pressprich, after offering to get paid a secretary’s salary. The rest, as they say, is history.

Since co-founding Home Depot—which employs upwards of 400,000 people and hit $100 billion in sales for the first time last year—Langone has become a prominent philanthropist.

Remember hearing recently that New York University (NYU) would now be tuition-free for all incoming med students? That was made possible not because of socialism, but because of donations from capitalists like Langone. He and his wife gave the school $100 million after learning that the U.S. could face a serious doctor shortage in the coming years.

As he explained at the conference, only capitalism creates wealth, which is then freely redistributed. Socialism creates little to no wealth and redistributes poverty. People in Venezuela, sadly, are learning this lesson firsthand, as inflation there is forecast to hit an unbelievable 1 million percent by the end of the year.

I believe this is a lesson many Americans need to be reminded of, especially now as faith in capitalism is waning and interest in socialism is getting stronger, according to a Gallup poll in August. Capitalism “is not perfect,” Langone said on FOX Business last month, “but it’s the best out there.”

Check out our latest slideshow on the world’s 10 youngest billionaires!

Global Risks May Bring the Polish to Gold

Keep your eyes on the price of gold because the Fear Trade is about to heat up. And I’m not just saying that because the U.S. trade war with China is about to intensify even further, with tariffs on $267 billion worth of Chinese goods announced on Friday.

It’s been 10 years now since the start of the global financial crisis, and emerging markets are signaling trouble that some investors fear could have a spillover effect into developed markets. Last week, the MSCI EM Index, which consists of 24 countries, entered bear market territory after falling more than 20 percent from its January high.

EM currencies have been under considerable pressure so far this year, with some of them falling to record or near-record lows against the U.S. dollar. Other factors include global trade tensions and higher oil prices—both of which contribute to faster inflation. Rising U.S. interest rates are also making it harder for governments to pay off dollar-denominated debt.

Emerging market currencies have faced considerable turmoil this year
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The fear is that the EM slowdown could spell contagion, as we saw in the late 1990s with the Asian financial crisis. Although I don’t believe the current situation to be as bad as the one in 1997, it might prove prudent to ensure that your portfolio has the recommended 10 percent weighting in gold bullion and high-quality gold funds with a proven track record. In its latest report, research firm Metals Focus warns that global growth could take a hit should these markets continue to stumble, “with the resultant stock market impact encouraging investors to gradually rotate in favor of gold.”

We’re already seeing some slowdown in the global manufacturing expansion rate. The purchasing manager’s index (PMI) has been dropping steadily since its recent high in December 2017, and in August it fell slightly to 52.5 from a July reading of 52.8, with “confidence regarding the outlook for one year’s time [dipping] to a near two-year low,” according to IHS Markit, which compiles the monthly PMI data.

global manufacturing fell to 21-month low in august
click to enlarge

Last week gold was trading in the $1,200 an ounce range. But there’s even greater upside potential, I believe, as investors, especially those in emerging markets, seek a safe haven from their country’s weakening currencies against the dollar. Now could be a good opportunity to add to your exposure at an attractive valuation.

Another Emerging Market Crisis?

Turkey was among the fastest growing economies last year, expanding 7.4 percent, but it could be facing stagflation on higher inflation—consumer prices rose close to 18 percent in August—U.S.-imposed sanctions and a private sector debt crisis. The lira has lost more than 40 percent this year, and as I shared with you last month, President Recep Erdogan has urged his fellow Turks to convert gold and hard currencies into lira in an attempt to shore up the country’s troubled currency.

The worst performing currency in emerging markets so far this year is the Argentinian peso, off 50 percent as South America’s second-largest economy edges closer to recession. Investors were rattled last week when President Mauricio Macri’s administration unexpectedly enacted new export taxes and austerity measures, including ministry cuts, in an effort to balance the budget ahead of a $50 billion emergency loan from the International Monetary Fund (IMF). With interest rates at an eye-watering 60 percent, the highest in the world, economists surveyed by the country’s central bank forecast an economic contraction of nearly 2 percent in 2018.

And then there’s South Africa. Its economy has slipped into recession for the first time since 2009, having contracted for two straight quarters, according to the national statistical service.

south africa's economy slips into first recession since 2009
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Among the weakest sectors in South Africa during the second quarter was agriculture, which plunged almost 30 percent on lower production. The best performing sector was mining, which rose nearly 5 percent on increased production of platinum metals, copper and nickel.

Exacerbating all of this is historically high levels of debt. Debt in emerging markets stood at $63 trillion in 2017, up sevenfold from 2002 levels, according to the Institute of International Finance (IIF). And as I said earlier, higher U.S. interest rates make servicing this debt more expensive.

total emerging market debt in trillions
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American Workers Get a Raise

Speaking of interest rates, I believe it’s a near-guarantee that they’ll be hiked again this month after Friday’s positive jobs report. The U.S. added 201,000 jobs in August, beating economists’ expectations of 190,000. This is the 95th straight month that U.S. employers hired more people than fired—a record streak.

Americans got the biggest pay raise since the great recession
click to enlarge

What’s more, wages for American workers in August accelerated 2.9 percent year-on-year—right in line with official annnual inflation and marking the fastest pace of wage growth since the financial crisis.

This is good news indeed for retailers such as Home Depot. It’s also constructive for the U.S. economy as a whole. Second-quarter gross domestic product (GDP) growth is expected to be revised up to 4.4 percent from the earlier 4.2 percent, based on higher-than-anticipated consumer spending. And the Federal Reserve Bank of Atlanta now predicts GDP in the third quarter to expand at the same rate, 4.4 percent, spurred by strong consumer confidence, lower corporate taxes and deregulation.

 

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

The MSCI Emerging Markets Index captures large and mid-cap representation across 24 Emerging Markets(EM) countries*. With 1,137 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of 6/30/2018: The Home Depot Inc.

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5 World Currencies That Are Closely Tied to Commodities
September 5, 2018

This year, commodity prices have been under pressure from a strong U.S. dollar and trade war fears. This has made a huge dent in the balance sheet of many net exporters of resources, in turn weakening their currencies. However, commodities could be on the rebound and are flashing a massive buy signal.

This should come as a shock to no one, but what most people don’t realize is just how closely some currencies track certain commodities. I have shared several charts that show this correlation over the years at numerous industry conferences. Attendees were always astounded when I got to these slides – and we’re talking professional economists, money managers and CEOs here.

With that said, I think it’s important that you see this correlation as well. Below are five world currencies that have been impacted by lower commodity prices.

1. Australian Dollar

Australia is the world’s top iron ore producer and exporter, with usable iron ore output of 880 metric tons in 2017. This means that its income is very sensitive to price changes. As demand from China, the world’s largest consumer of iron ore and top steel producer, has softened, so too has the Australian dollar.

Australian Dollar Tracks Iron Ore Prices
click to enlarge

2. Canadian Dollar

The fifth-largest oil producer in the world is Canada, with an average production of 4.59 million barrels per day in 2016. Oil accounts for almost 11 percent of the nation’s exports – almost all of which is sent straight to the U.S. The strong correlation between the Canadian dollar and oil prices is largely due to crude oil being the largest single contributor of foreign exchange to the nation. Should oil prices continue to rise, so too should the Canadian dollar.

Canadian Dollar Tracks Oil Prices
click to enlarge

3. Russian Ruble

Compared to Canada and Australia, Russia’s export mix isn’t nearly as diversified: about half of its exports in terms of value are a combination of oil and natural gas. (Russia sits atop the third-largest oil reserves in the world and the number one natural gas reserves.) It should come as no surprise, then, that its currency is highly influenced by the price of crude. When oil fell in July 2014, so did the ruble. However, the ruble and crude decoupled in early 2018 when the U.S. imposed sanctions against the Eastern European country for its alleged meddling in the 2016 presidential election.

Russian Ruble Tracks Oil Prices
click to enlarge

4. Colombian Peso

The same story can be found in Colombia, where oil exports are responsible for about 20 percent of government revenue and 25 percent of total exports. Although oil exports fell from $12.7 billion in 2015 to $8.26 billion in 2016, production exceeded targets in 2017 with an average 854,121 barrels per day. As Venezuela’s economy falls further into disarray, Colombia has taken its place as the number five exporter of oil to the U.S. – one of the world’s biggest markets.

Colombian peso tracks oil prices
click to enlarge

5. Peruvian Sol

Copper is Peru’s most important mineral export by value, amounting to 24 percent of exports in 2016 worth $8.77 billion. With around 81 million metric tons of copper reserves, it’s the second-largest producer after Chile. As such, the Peruvian sol has declined in tandem with the red metal.

Peruvian Sol Tracks Copper Prices
click to enlarge

How familiar are you with the world’s currencies? Test your knowledge in this interactive quiz!

 

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

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China's Belt and Road Initiative Opens Up Unprecedented Opportunities
September 4, 2018

 

Mapping the belt and road initiatives progress
click to enlarge

It was the best of times, it was the worst of times. A tale of two world leaders, U.S. president Donald Trump and China president Xi Jinping—both of whose countries have among the world’s best economies right now. But whereas Xi is playing Santa Claus to the rest of the world, doling out loans to finance-starved countries, Trump is playing Scrooge, waging an economic war with Canada, the European Union, China and others.

Respected economist Art Laffer, whom I’ve written about before, has always supported leaders who ignite global trade rather than close off its borders. A full-blown trade war, Laffer said recently, would be a “curse” on the U.S. economy.

Post-World War II, it was the U.S. that led global trade and infrastructure build-out—the Marshall Plan in Europe, the Interstate Highway System domestically. Both projects required massive amounts of commodities and raw materials, and employed hundreds of thousands of people.

Today, of the two leaders mentioned above, it’s Xi who has a clear foreign policy when it comes to trade and infrastructure.

U.S. Fund Flows Into Africa Are Slowing

Case in point: This week, Beijing will host the Forum on China-Africa Cooperation (FOCAC). The summit, which takes place once every three years and is attended by representatives from 52 African countries, touches on areas as diverse as technology, trade, infrastructure, diplomacy, culture and agriculture.

During the last forum, in 2015, China pledged as much as $60 billion toward Africa’s development in interest-free loans. The Asian country, in fact, has increased its investments in the continent around 520 percent over the last 15 years, according to Global Trade Magazine.

As just one example, Kenya agreed to let China finance and build a standard gauge railway (SGR) connecting two major cities at a cost of $3.8 billion. Contracted by China Road and Bridge, the Mombasa-Nairobi SGR is Kenya’s largest infrastructure project since it declared independence from the U.K. in 1963.

Meanwhile, U.S. fund flows to Africa have been receding, and they’re expected to slow even more during Trump’s administration.

Chinese investment in Africa has held steady as the United States declines
click to enlarge

Xi isn’t doing this out of the goodness of his heart, of course. China, having been Africa’s largest trading partner for nine consecutive years now, likely expects its investments to pay diplomatic and economic dividends for many decades to come.

Even Trump’s own commerce secretary, Wilbur Ross, acknowledges that the U.S. must do more in Africa. “By pouring money into Africa,” Ross wrote on CNBC in August, “China has seen an opportunity to both gain political influence and to reap future rewards in a continent whose economies are predicted to boom in the coming decades,” due mainly to a younger demographic.

The Belt and Road Initiative Will Affect 60 Percent of the World’s Population

The most well-known among China’s projects is the Belt and Road Initiative (BRI), one of the most ambitious undertakings in human history. The biblical-size trade and infrastructure endeavor—a sort of 21st century Silk Road—could cost 12 times as much as what the U.S. spent on the Marshall Plan to rebuild Europe following World War II. The BRI has the participation of 76 countries from Asia, Africa and Europe, and is poised not only to reshape globe trade but also raise the living standards for more than half of the world’s population.

According to the International Monetary Fund (IMF), the “BRI has great potential for China and participating countries. It could fill large and long-standing infrastructure gaps in partner countries, boosting their growth prospects, strengthening supply chains and trade and increasing employment.”

The BRI, which turns five years old this fall, announced in 2013, will have a strong presence in Eastern Europe, also a prime destination for China FDI, as the countries there offer a wealth of metals, minerals and agricultural products.

GPD and PMI car anolog

According to Stratfor, Chinese companies have invested as much as $300 billion in Eastern Europe over the past decade. Last May, China and Ukraine agreed to cooperate on joint projects valued at nearly $7 billion, and in November, it was announced that China Railway International and China Pacific Construction would build a $2 billion subway line in the Ukrainian capital, Kiev. More recently, Chinese engineers with China Harbor Engineering completed a $40 million dredging operation in Ukraine’s Yuzhny Sea Port, allowing it to receive larger ships.

Like the Marshall Plan before it, the BRI will require tremendous amounts of commodities, metals and fuel.

In 2011, members of our investment team and I had the opportunity to see one of China’s high speed trains firsthand. The train averaged 185 miles per hour during our 923-mile trip from Shanghai to Beijing. As I wrote then, “I’ve traveled to all corners of the world and have seen many things during my travels, but viewing China’s explosive growth as it flies by you is something I will never forget.”

U.S. Investors Hiked Exposure to China

In light of all this, there’s no lack of negative news on China right now. I see headline after headline on the country’s “slowing economy” and “weakening consumption,” but like most things are in the media, these proclamations are overblown.

Look at China’s purchasing manager’s index (PMI). Fresh data out last Friday showed that manufacturing expansion in August accelerated slightly faster than in the previous month. The PMI hit 51.3, up from 51.2 in July and beating analysts’ expectations of 51.0. This was the 25th straight month of economic expansion, despite what I earlier described as the Trump-Kudlow trade war with China.  

China manufacturing activity accelerated in august despite trade concerns purchasing managers index from august 2016 to august 2018
click to enlarge

Also, as the Peterson Institute for International Economics (PIIE) wrote last week, “there is no empirical evidence that consumption in China is weakening,” contrary to what “official” retail sales data show.

The PIIE’s Nicholas Lardy cited Alibaba’s recent announcement that sales rose 60 percent in the most recent quarter compared to a year ago—“a sign that Chinese retail sales data likely do not fully capture China’s burgeoning digital retail.”

“In any case,” Lardy continued, “retail sales are an increasingly less useful measure of consumption, as China’s large and still growing middle class is spending a growing share of their rising income on education, health care, travel and other services that are not captured in official data on retail sales.”

gross domestic product in absoluve terms and gdp on purchasing parity valuation
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Savvy investors, I believe, get it and can see the opportunity in the world’s number one economy, as ranked by purchasing power parity (PPP). Reuters reports that, in the week ended August 22, U.S. investors poured $572 million into funds that invest in Chinese equities. That was the most for such funds since January.

Although some expect Trump to impose tariffs on $200 billion additional Chinese imports, perhaps as early as this week, “investors are expecting Beijing to continue counteracting the effects of the [trade] dispute with increasingly relaxed monetary and fiscal policies,” Reuters says.

Curious to learn more? Watch this short video on investment opportunities in China!

 

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

Gross domestic product (GDP) is the total value of goods produced and services provided in a country during one year. Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. None of the securities mentioned in the article were held by any accounts managed by U.S. Global Investors as of 6/30/2018.

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Early-Stage Investing with Adam Sharp (EXCLUSIVE INTERVIEW)
August 30, 2018

For years, Adam Sharp has helped accredited and retail investors get in on the ground floor of some of the most promising early stage investment opportunities. These include not just venture capital but also equity crowdfunding and cryptocurrencies, which he added last year to his two research offerings, First Stage Investor and Crypto Asset Strategies.

I recently had the pleasure to speak one-on-one with Adam, whose deep knowledge of the rewards and challenges of early stage investing is bar none. Read on to get his unique insights into the future of bitcoin trading, the promise of cannabis stocks and what he looks for in a startup. 

When did you first get involved with bitcoin?

I got into the financial newsletter industry in about 2008, doing marketing and search engine optimization (SEO), and I started reading people who come from the libertarian, Austrian school of economics—Bill Bonner, Porter Stansberry and some others. It was on one of these online message boards in 2011 that I first heard about bitcoin. It might have been trading for less than a dollar. I watched it for a while, and in 2013 I finally decided to pull the trigger because there was a reputable exchange at this point. I got in at $84 a coin, and I’ve held onto them ever since.

It’s been a wild ride, and the volatility we’re seeing right now is admittedly hard. It’s difficult to maintain a positive community during a correction like this, but I think the alt-coins that are able to survive the downturn are going to come out even stronger and be in a really good place in a couple of years.

Early on, did you experience any pushback from friends and colleagues?

I might have convinced a few people successfully to buy bitcoin, but not many. It wasn’t easy, trying to describe this new alternate financial system that had maybe 100,000 participants around the world. I think part of it is that, at the time, I didn’t fully know what was going to happen. Maybe it would be worth a lot of money some day?

Turkish lira down more than 45% for the year
click to enlarge

Now that I’ve been through a couple of cycles, I can see how the growth works, and I believe it’s sustainable over long periods. Bitcoin and cryptocurrencies in general have built up big enough communities and momentum that I think they can become a major monetary force in the world. What’s really going to drive this forward are currency crises around the world, not to mention growing distrust in banks and governments. It’s a slow process, and it won’t happen overnight.

So where are the institutional investors?

The institutional crypto boom we’ve been anticipating is real. The infrastructure is in place now to support big investors. Contrarians will likely lead the way. It might be as much as a year out, but eventually you’ll have a couple of guys move heavily into cryptocurrencies and start posting some attractive returns. And then I think you’re going to see many numbers of followers jump in.

Speaking of that, you wrote recently about Intercontinental Exchange (ICE), owner and operator of the New York Stock Exchange (NYSE), launching Bakkt. Many people are calling this project a game changer. Explain what Bakkt means for cryptocurrency trading.

Bakkt is definitely the biggest news of the year. It’s exactly the type of qualified, regulated custody solution big financial firms need to be comfortable enough to get started in crypto—and it launches in November. It has the backing of ICE, the NYSE, Microsoft, Starbucks and others. It’s going to be a huge step in the right direction in terms of getting big firms on board, and I think it should help pave the way for a bitcoin ETF as well. The market’s reaction so far has been nothing short of ecstatic.

designed to solve the need for trusted price formation in cryptocurrencies. what bakkt will provide

Perception is definitely an important factor when writing about not just cryptocurrencies but also cannabis, an industry you also follow. What do you think will be the biggest challenges in changing people’s minds about these asset classes?

I think we’ve already hit the tipping point with cannabis. It’s just a matter of how long the Feds can last under the pressure. Right now in every state, there are kids with epilepsy and other disorders, and their parents are desperate for new treatment options. This is what’s driving the entire thing. Kids and adults both need access to cannabidiol (CBD) oil—which isn’t the psychoactive part of marijuana, by the way—and it’s getting tougher for government officials to deny them this.

What’s convinced a lot of skeptics is that, not only can you treat epileptic children with CBD oil, you can also get them off Xanax and other incredibly addictive sedatives. The medical potential is limitless, touching on pain relief, insomnia, anti-inflammation, appetite and many other applications. The pharmaceutical companies are probably terrified, and they should be.

And yet we still know so little about it.

We’ve discovered as many as 113 different cannabinoids, but so far very little research has been done. Most of it isn’t happening here in the U.S., either, and I’m afraid we could fall behind the rest of the world. In recent months, for example, some very promising studies in Israel have shown that autism can be treated with CBD and tetrahydrocannabinol (THC). We’re just beginning to scratch the surface.

the pharmaceutical companies are probably terrified, and they should be.

Let’s move on to private equity and venture capital. Global private equity firms raised a record $453 billion in 2017. Why do you think this space is booming right now? What are the contributing factors?

A lot of it has to do with the Enron scandal in 2001 and the Sarbanes-Oxley Act (SOX) that was enacted afterward, which made it many times more expensive to be a publicly traded company. To be clear, I think public markets are a very good thing overall for companies. They enforce discipline, and they make things transparent. But more and more, people want the privacy of being a private corporation. Combined with SOX, this is what’s leading the boom in private equity. This huge venture ecosystem has sprouted up to meet demand, and companies now have access to the best deals, the best networks and the most capital. If you’re a company like Uber, you really don’t need to go public anymore.

global private equity raised a record amount in 2017
click to enlarge

One thing we’re constantly trying to find for our members is different ways to invest in private companies. There are a few good publicly traded stocks through which you can access private equity. With equity crowdfunding, you can also invest in individual startups that are raising money online. It’s really a fascinating industry, and it’s a lot of fun because you get to work with young entrepreneurs. I believe it’s the future of capital formation.

I should also add that the whole initial coin offering (ICO) phenomenon was partly a reaction to the lack of opportunities in public markets.

What do you look for in a startup?

My favorite startups are those that haven’t raised much, if any, funding, but they’ve built the business with sweat equity and elbow grease. If they’ve invested their own money, that’s great, but if they’ve boot-strapped their way to a couple million dollars in revenue, that’s the ideal situation for me. It doesn’t really matter what industry it’s in, as long as the company’s growing at a fast and sustainable rate.

Other than that, I look for startups headed by people who are experts in their field, with a deep background and understanding. Ideally the founder or chief executive has a magnetic personality and can attract capital, talent and press. You want somebody that can tell their story well, and that people want to work for and write articles about. I’d like to think that when I talk to a founder I can tell how much magnetism they have, but you do get false positives from time to time.

You co-founded and write for a number of subscription research services. Tell us about some of these projects, what they focus on and how our readers can sign up for them.

We believe early stage investing and cryptocurrencies are the two leading alternative investments that are available to everyday investors, so that’s what we try to focus on. 

Our first service, First Stage Investor, covers startup investments. Basically, we look at all of the equity crowdfunding deals that are on the market at any given time and we try to find the best ones for our members to invest in. We have a cryptocurrency portfolio in First Stage Investors that we started last summer, so you get a mix.

Our other service is called Crypto Asset Strategies, which, as the name implies, is crypto-only, with the exception of a couple of publicly traded stocks. We look for the most promising bitcoin and Ethereum competitors—coins that are 1/100th or 1/500th the size of bitcoin or Ethereum. And then we do the research. We talk to the founders when possible, and we recommend what we feel are the best ones to our members.  

Curious to learn more about the blockchain and cryptocurrency market? Stay up to date by subscribing to the FREE, award-winning Investor Alert!

 

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. None of the securities mentioned in the article were held by any accounts managed by U.S. Global Investors as of 6/30/2018.

 

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The 5 Dimensions of a Rich Life
August 27, 2018

5 dimensions of a rich life

Studies show that mindfulness and having an attitude for gratitude is important in all aspects of life. One way to increase gratitude is to regularly take stock of not only your finances, but the other dimensions of your life as well. This includes relationships with family and friends, personal and professional achievements, and ways in which you give back.

During my recent trip to the Oxford Club’s Private Wealth Seminar in Whistler, I was reminded of this very topic. I had the privilege of hearing from numerous inspiring and intelligent investment professionals during the event, including my good friends and chief strategists at the Oxford Club, Alex Green and Marc Lichtenfeld.

One of the presentations, however, really stood out to me. The topic included the five dimensions to living a rich and fulfilling life, a theme also covered in Alex Green’s book Beyond Wealth.

The key? Being “rich” isn’t all about money.

1. Monetary Gain and Financial Freedom

When you think of richness, you likely go straight to monetary wealth. Granted, this dimension of life is incredibly important, but what’s more important are the steps taken to achieve a sense of financial stability. Having the knowledge and skills to responsibly build wealth can bring a sense of strength, comfort and safety that is unmatched.

This is particularly true for those approaching retirement age, a time when families don’t want to rely on the government for assistance, but instead want a nest egg, and then some.

As demonstrated in one of my favorite books, The Millionaire Next Door, the average millionaire doesn’t make ostentatious displays of wealth, rather they under consume and live in average-to-middle class neighborhoods and focus on investing. Simple strategies like these can make a world of difference.

2. Extraordinary Experiences

GPD and PMI car anologAre you challenging yourself to stray from your everyday activities? Extraordinary experiences, such as traveling the world, bring a new perspective to life. Pushing yourself out of your comfort zone is the key to growth.

I often write about the importance of explicit and tacit knowledge, with tacit knowledge referring to real world experiences, or boots-on-the-ground research. I have always believed this type of knowledge is just as important as textbook knowledge. Having your driver’s license, for example, is simply a piece of paper. It means nothing until you put it to use, get out on the open road and explore.

I travel often for both business and leisure and it’s true that you have to see the sights, taste the food, meet the people and hear the music to experience the limitless delights that the world has to offer.

3. Personal Achievement

Everyone has different goals they set out to accomplish in their lifetime. Taking time to list out all of your personal achievements thus far, as well as the goals you’re still working toward, is one way to truly put things in perspective.

Continuing the pursuit of personal achievement keeps you active physically and mentally, and encourages you to keep learning. One personal achievement I am very proud of is my completion of numerous marathons all over the world. Running these races was challenging no doubt, but equally as rewarding.

4. Ways of Giving Back

One of the many rewarding aspects of life is having the ability to make a lasting impact on your community and those around you. Giving back typically comes in the form of volunteering, whether it’s with your time or money, to help support causes close to your heart. At U.S. Global Investors we make it a point to support our local community and I’ve always encouraged employees to volunteer for and share causes important to them.

5. Strong Relationships– Intellectual and Emotional

Love and friendship are easily two of the most meaningful components of a rich and fulfilling life, and both are achieved through strong relationships. Whether at home or at the office, surrounding yourself with like-minded, passionate, successful and caring individuals can truly be the driving force behind how you choose to live your life.

Social wealth and a sense of connection are just as powerful as financial wealth. Self-confidence and self-worth are important feelings, and often times, high self-worth is correlated with high net worth. To me, relationships are one of the most rewarding aspects of life and in this video I discuss the crucial role that mentors played in mine. The wisdom and experience of someone who has walked a different path than you, or who is further down the road than you are, can help steer you away from setbacks or roadblocks to maintain a balanced life.

Maintaining a Well-Balanced Portfolio

GPD and PMI car anolog
click to enlarge

Interpersonal relationships aren’t the only thing that a fulfilled person should balance. It’s never too late to start learning the basics of a well-managed portfolio.

One rule of thumb is to have an ever-shifting balance between equities and bonds, with some exposure to gold for diversification. Traditionally, equities are more growth-oriented than bonds, but also hold greater risk. As you age, your portfolio should evolve to contain a higher allocation to bonds, which favor safety and liquidity over growth.

I believe it’s prudent that your allocation to bonds be equal to your age, as seen in this chart. Follow the 10% Golden Rule, and put the remainder of your portfolio in equities.

GPD and PMI car anologAs a refresher, here’s what I mean by the “10% Golden Rule”. The rule suggests a 10 percent portfolio allocation to gold, with 5 percent in bullion or gold jewelry and 5 percent in well-managed gold mutual funds or ETFs.

Remember to rebalance annually, adjusting allocations and weightings as investment goals change.

While we have an eye for gold at U.S. Global, we also provide investors with a wide array of opportunities to invest with us, ranging from emerging markets and natural resources to infrastructure and domestic funds. 

 

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

Diversification does not protect an investor from market risks and does not assure a profit.

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Net Asset Value
as of 10/16/2018

Global Resources Fund PSPFX $5.18 0.07 Gold and Precious Metals Fund USERX $6.97 0.01 World Precious Minerals Fund UNWPX $3.60 0.01 China Region Fund USCOX $8.21 0.14 Emerging Europe Fund EUROX $6.50 0.12 All American Equity Fund GBTFX $25.72 0.39 Holmes Macro Trends Fund MEGAX $18.50 0.39 Near-Term Tax Free Fund NEARX $2.19 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change