Your Only Defense Against the Investing Lies You’ve Been Told

Investing Strategies

I am a huge fan of philosophy.

I think it should be taught at the high school level, not to push one belief set over another, but to teach the art of thinking.

Don’t get me wrong. I am not a learned scholar who writes deep, complicated papers on the topic and can lecture at length on the lives of the ancient Greeks, both major and minor.

I am just a fan of reading and thinking about the meaning of it all and how it works. And I am not the only investor who is enthralled by philosophy.

It’s helped some of the greatest minds in investing, and me as well, to avoid the stories and lies we’re told about investing and the markets…

And shown us how to make real money.

Today, I want to show you.

Man climbing stacks of coins in concrete room

Bill Miller majored in philosophy at Johns Hopkins University and donated $75 million to the Johns Hopkins University Department of Philosophy in 2018.

While Miller studied economics and finance as an undergraduate at Washington and Lee University, he took graduate courses in philosophy in the PhD Program at Hopkins.

George Soros (whether love him or hate him, he is one of the best investors and traders of all time) studied philosophy as part of his degree at the London School of Economics.

He has often cited the work of Austrian philosopher Karl Popper as one of the architects of his successful career.

Carli Icahn has a philosophy degree from Princeton.

Boaz Weinstein of Saba Capital, one of the best fixed-income investors of our time, graduated with a philosophy degree from the University of Michigan.

I have read many of the philosophers considered to be the greatest of the ages. I have read more than a few of the minor philosophical greats.

It may come as a surprise to you that my favorite philosopher is a physicist.

Richard Feynman worked on everything from the Manhattan Project to the Challenger explosion inquiry. He received a Nobel Prize for his work in quantum electrodynamics, which I am told altered how scientists understand the nature of waves and particles.

His class lessons at Caltech were published as the Feynman Lectures on Physics and are considered a classic by physicists and mathematicians.

I confess to understanding only a small portion of his physics work. It is his thoughts on life, science, and the meaning of it all that resonate with me. His core beliefs were wrapped around the general concepts of testing everything and not worrying about what other people think.

Many of you right now are wondering why you should care what I think about philosophy, science, or anything else not directly related to making money in stocks.

The answer is simple but challenging.

Let’s start with the fact you are being misled constantly. Wall Street has one set of lies it wants you to believe. Most of the academics that research markets have another. The media has yet another story to tell.

Much of it is designed, consciously or not, to separate you from as much of your money as possible as painlessly as possible.

All of it is designed to preserve the careers, paycheck, and wealth of those spinning the yarn.

Your only protection against these stories, well told and carefully defended, is a philosophy derived from empirical testing ideas and systems.

You need to know what works and what does not work in the world of investing. You need core, unshakeable beliefs about investing that accomplish two objectives.

First, these beliefs allow you to ignore the cons, grifts, and fairy tales that will be used to empty your wallet. Second, they deliver the results you need to provide the amount of cash you need to live the life you want to have.

This is where Feynman’s advice to be wrong as quickly as possible because that is the only way to uncover that small handful of ideas that can accomplish those two objectives.

You have to eliminate all the wonderful-sounding concepts that simply do not work. The path to investment success is not as complex as Wall Street, and the collected pundits and preachers, might have you believe.

It is not, however, an easy path at all times. You have to hold more than one idea in your head at once and understand the concept of ever-changing cycles and how it applies to your core beliefs and philosophy.

I have spent the last three decades developing the core philosophy of investing that drives my work today and my understanding of the law of ever-changing cycles.

That experience, and the fact that I don’t care about what I’m “supposed” to think, brings me to the conclusion that the two best paths to building the wealth needed to get you where you want to go are small-cap stocks and higher-yielding income-producing investments.

Both paths have rigid rules for success. Both contradict almost everything you hear from Wall Street and the financial media.

We will talk more about this on Thursday.