{"id":37515,"date":"2013-04-14T10:09:42","date_gmt":"2013-04-14T14:09:42","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=37515"},"modified":"2013-04-12T15:10:34","modified_gmt":"2013-04-12T19:10:34","slug":"the-lucky-country","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/04\/14\/the-lucky-country\/","title":{"rendered":"The Lucky Country…"},"content":{"rendered":"

By Bill Bonner<\/strong><\/p>\n

Nothing beats luck! Then luck beats you.<\/p>\n

Want to know the secret of success? John D. Rockefeller explained it a century ago: “Get to work early. Work late. Strike oil.”<\/p>\n

“It’s amazing how lucky I get when I work 14 hours per day,” said a famous workaholic.<\/p>\n

But a lot of people who work 14 hours per day don’t get lucky. They
\njust get tired. They drill dry holes. They run for president… and
\nlose. They do careful stock market research… and the stocks go down,
\nanyway.<\/p>\n

What’s the real secret? Napoleon knew it. He said he didn’t want smart generals. He wanted lucky generals.<\/p>\n

That’s not to say that luck is everything. You have to be ready for it… and worthy of it.<\/p>\n

How? By working hard. There are certain basic requirements for
\nanything. If you want to be a plumber, you’ve got to learn your pipes.
\nIf you want to be an economist, you’ve got to know your mumbo-jumbo. And
\nif you want to win a Nobel Prize, you’ve got to do something that the
\nNobel committee might consider worthwhile.<\/p>\n

All of those things are more or less under your control. And if you
\nwant to get lucky in your career or your investments, you have to lay
\nthe groundwork. You’ve got to put in the hours.<\/p>\n

But then… it’s a matter of luck.<\/p>\n

The Buffett Factor<\/h3>\n

Everybody knows Warren Buffett is a genius. But there are a lot of
\ngeniuses in the investment world. And not all of them are Warren
\nBuffett. What makes the difference? You got it \u2013 luck!<\/p>\n

He was buying solid stocks in an intelligent way in the middle of the biggest financial boom in history. Here’s Bloomberg<\/strong><\/a>, on the case:<\/p>\n

Bill Gross, manager of the world’s
\nlargest mutual fund, said the most renowned investors from Warren
\nBuffett to George Soros may owe their reputations to a favorable era for
\nmoney management as expanding credit fueled gains in asset prices
\nacross markets.<\/em><\/p>\n

The real test of greatness for
\ninvestors is not how they navigated market cycles during that time, but
\nwhether they can adapt to historical changes occurring over half a
\ncentury or longer, Gross, 68, wrote in an investment outlook published
\ntoday entitled “A Man in the Mirror,” named after a song by Michael
\nJackson.<\/em><\/p>\n

“All of us, even the old guys like
\nBuffett, Soros, Fuss \u2013 yeah, me too \u2013 have cut our teeth during perhaps
\na most advantageous period of time, the most attractive epoch, that an
\ninvestor could experience,” Gross wrote. “Perhaps it was the epoch that
\nmade the man, as opposed to the man that made the epoch.”<\/em><\/p>\n

What was unique about the epoch \u2013 1980-2007 \u2013 was that it was the final stage of a huge private-sector credit expansion.<\/p>\n

There were many reasons for this phenomenon, in which total US debt
\nwent from about 150% of GDP to over 350%. The main one was that the US
\nwas lucky. It has the world’s reserve currency. People used the dollar
\nas they had once used gold. They thought they could trust it. So when
\nthe US sent a dollar overseas<\/strong><\/a>, the foreigners were happy to take it… and keep it. They still are.<\/p>\n

This huge credit expansion meant that consumers could buy things
\nwithout fully paying for them. The foreigners took their dollars… and
\nheld onto them. They never asked for anything else in return.<\/p>\n

It also meant that businesses in the US were able to earn revenue
\nwith no offsetting labor cost. People were spending money they never
\nearned… that is, money that US businesses never paid out in wages.
\nThey were living on credit \u2013 on earnings that were supposed to take
\nplace in the future. This meant business revenues were higher than
\nusual… and their costs were lower.<\/p>\n

Luck Runs Out<\/h3>\n

It was a great time to be an investor. It was a great time to be a consumer too. We were all lucky.<\/p>\n

But luck runs out. For five years now, the US private sector has been
\ntrying to deleverage \u2013 as the public sector insists that it borrow
\nmore. Result: economic stagnation.<\/p>\n

Also, US consumers have watched their wages and family incomes fall<\/strong><\/a>
\nfor more than 10 years. And US investors \u2013 led by Warren Buffett \u2013 have
\nbeen unable to stay even. Adjusted for inflation (however you calculate
\nit), investors are still below where they were in 2000.<\/p>\n

And now the world has changed \u2013 it is now almost the opposite of
\n1980, when the big boom began. Today, stocks are expensive, not cheap
\nlike they were in 1980. Interest rates are low, not high like they were
\nin 1980. Total debt is now around 350% of GDP, not 150% like it was in
\n1980.<\/p>\n

Hope to make a lot of money in stocks or bonds now? Good luck!<\/p>\n

Regards,<\/p>\n

\"Bill<\/p>\n

Bill<\/p>\n

To learn more about Bill Visit his Google+ Page or Bill Bonner’s Diary<\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Bill Bonner Nothing beats luck! Then luck beats you. Want to know the secret of success? John D. Rockefeller explained it a century ago: “Get to work early. Work late. Strike oil.” “It’s amazing how lucky I get when I work 14 hours per day,” said a famous workaholic. But a lot of people … <\/p>\n

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