With the market turning back up – at least for now – most reader emails shifted away from stocks. And that opened the door to an eclectic mix of topics in this week’s mailbag.
So sit back… get comfortable… and let’s dive into it…
First up, Legacy Research cofounder Bill Bonner (The Bonner-Denning Letter and Bill Bonner’s Diary) tackles a reader question about free stuff…
Reader question: How low can we go? The Democratic Party I used to know no longer exists. It picks topics that are appealing to people who want free stuff.
Most of the Democrats are using free stuff to the point if you don’t want to work you will be paid anyway. In my lifetime, that was never acceptable. You worked, or you didn’t get paid.
Who is going to pay for all this?
– Ron A.
Bill’s answer: To make a long story short, when it comes to government debt, the borrower never pays; the feds have no money. The lenders – big banks, investment funds, well-heeled insiders – don’t want to pay.
Generally, they collude with the feds to make sure the real cost is put on innocent third parties – taxpayers and consumers.
That was the meaning of the Fed’s announcement last week. There will be no rate hikes this year.
Still, it was shocking that Powell & Co. would cave in so fast. At least, Greenspan, Bernanke, and Yellen had enough sense of shame to wait for a crisis.
But here we are… at the tail end of a business expansion… with stocks near an all-time high and unemployment near an all-time low – and yet, the Fed’s key lending rate is barely above zero.
There’s a long, bumpy road ahead. You can’t anticipate the twists and turns along the way. But at least, we think we know where we’ll end up.
So, if you are wondering who gets stuck with the feds’ enormous debts, here is your answer: You do.
Moving on… a question that always pops up a few times a year… and an answer from our master trader, Jeff Clark (Delta Report and Market Minute)…
Reader question: Hi, Jeff. I am a Legacy Research Lifetime member and personally enjoying your option-trading recommendations, your analysis, and learnings.
I have one personal opinion that you should also back up your recommendations with personal holdings in that trade. If you also include this, then it would be more convincing.
Also, every quarter, we would be able to see actual dollar value these trades are making, instead of showing just percentages.
It just adds more personalization and shows you have a stake in the trades you are making recommendations for. Doesn’t matter if it’s just $500.
Let me know what you think.
– Pradeep D. (Legacy Research member)
Jeff’s answer: I’ve heard that question many times over the years – as have my fellow editors – and I see your point. But it’s not as clear cut as you think.
Yes, by holding the same positions as my subscribers, you could argue that I have some skin in the game. But someone else could just as easily argue that I’d just be trying to talk my own book and boost my returns.
That’s why the policy here at Legacy Research has always been:
Legacy Research expressly forbids its writers from owning or having an interest in any security that they recommend to their readers. Furthermore, all other employees and agents of Legacy Research and its affiliate companies must wait 24 hours before following an initial recommendation published on the Internet, or 72 hours after a printed publication is mailed.
It’s much better for everyone this way.
Next up… this week’s crypto question. (It seems like there’s always at least one.)
Once again, it’s for our globetrotting crypto expert, Teeka Tiwari (Palm Beach Letter, Palm Beach Confidential, Alpha Edge, and Crypto Income Quarterly).
Teeka made time during his travels from home… to Hong Kong… to Singapore… and back home again to give us an answer…
Reader question: This is a message for Teeka. I noted that JPMorgan is issuing its own cryptocurrency. What does that mean for our holdings?
– Barbara & Erik B.
Teeka’s answer: Here’s what’s interesting about where we are right now: Never in the history of this asset class have so many credible players started to take the underlying asset seriously.
You have JPMorgan Coin doing its own internal coin to move capital around. It’s not really a coin, it’s an internal derivative. But the fact that they are positioning it as a coin, the fact that it’s positioning it as a crypto, is educating the entire market on the benefit of this technology.
Then, we have Facebook Coin. It has 2.5 billion–2.7 billion customers that they’re now going to have to train on how to use what they are calling a cryptocurrency. It’s not a real cryptocurrency.
But the fact that it’s embracing this technology – and riding the coattails of the interest around this technology and bringing it to mom and pop in this huge global audience that ordinarily would not be exposed to crypto – is incredibly bullish for the underlying market.
For our last question, we turn away from money, markets, and macro ideas to take on a special request for Chris Lowe (The Daily Cut and Legacy Inner Circle)…
Reader question: I read Chris Lowe’s August 2018 piece – “Your Guide to Going Dark Online” – and noticed his dateline of Lisbon, Portugal.
Was he visiting, or does he live there? If the latter, does he like it there? I ask because I’m thinking of retiring there next year.
– Eric G. (Legacy Research member)
Chris’ answer: I’m on the road a lot, talking with our Legacy Research experts about their best insights. But I live in Lisbon for part of the year. I first started renting there last July.
It’s an easy, laid-back place to live. The weather is great – about 270 days of sunshine a year and an average temperature of about 72 degrees Fahrenheit. Uber rides are dirt-cheap, so it’s easy to get around. And it’s safe. The Global Peace Index rates 163 nations. It ranks Portugal the fourth-safest country in the world.
The food is also great – especially if you like fresh fish. The Portuguese have some of the best seafood in the world. Portugal also produces some of the world’s best wines (red and white). Although this remains a well-kept secret outside of Portugal.
Living in Portugal is also relatively cheap. As our colleagues at International Living magazine calculate it, it has arguably the lowest cost of living in Western Europe. They estimate a couple’s budget in Lisbon to start at about $2,100 or $2,200 a month – though, of course, you can spend more. If just one person, you should plan on a budget of about two-thirds that amount.
Lisbon is a picturesque city, too. Most folks who visit gush about how pretty it is. You have narrow cobbled streets… old, family-run businesses and restaurants… and stunning views of the Tagus River estuary, which the city runs along.
Also, Lisboans are a mellow crowd and easy to get along with. And you have easy access to hundreds of wild Atlantic beaches, the nearest of which are a 20- to 30-minute car ride away.
The big drawback right now is that Lisbon is popular with tourists and expats. This has pushed up real estate prices and rent. I didn’t find any real estate in Lisbon selling at attractive prices. And my rent isn’t anywhere near as low is it would have been five years ago. I pay about $1,350 a month for a recently restored one-bedroom apartment in a good area of town.
If you’re thinking of retiring there, check out the International Living Annual Global Retirement Index. Since 1990, it’s been ranking the top 10 retirement destinations. And this year, it ranked Portugal as the seventh-best country to retire in. You can read more about that here.
Those are all the questions for this week.
Before you go, though, I want to share a quick accolade for Legacy Research cofounder Doug Casey…
So let’s pass it over to a grateful reader for that…
Reader comment: I really enjoyed Doug’s Speculator book and am currently reading Drug Lord. They are great books, and I appreciate Doug’s wisdom and knowledge imparted in them.
Thanks for everything and all the Casey team’s hard work.
– Ron L. (Legacy Research member)
Have a nice weekend.