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About Me


Darren Winters is a self made investment multi-millionaire and successful entrepreneur. Amongst
his many businesses he owns the number 1 investment training company in the UK and Europe.
This company provides training courses in stock market, forex and property investing and since
the year 2000 has successfully trained over 250,000 people.


Friday 5 September 2014

Savvy Investor


There are countless examples were a minority of savvy investors and hard-nosed business people actually prospered handsomely during sharp economic downturns, wars and financial corrections. 

During my journey I have actually had the fortune or misfortune of meeting such people. For example, the stubby limbed, ruddy faced multi-millionaire Australian business man who monopolized the retail local meat market. Hanging on his office wall I noticed a vintage photo of a young man standing on what appeared to be a soapbox and handing out small parcels wrapped in newspaper sheets. The man was surrounded by crowds young and old, but there was one thing that the people in the crowds had in common; their clothes all seemed too baggy and a size or two too large. “That's my father standing on the soapbox”, said the ruddy faced Australian proudly and then he proceeded to tell the story. “During the great depression, like most people my parents were struggling for the bare necessities, including putting food on the table. Never having enough money to buy meat, he would buy offal instead, (the internal organs of a butchered animal). ” “He then realized that if the hungry masses couldn't afford meat, then offal would make an affordable substitute.” It was a winner and the business grew from there onwards to being the most successful meat retailer in the country. That's just one inspirational example of someone flipping adversity on its head and making a success out of it. 

Then there is another example of a shoulder length haired angelic faced man who amassed more than one million USD during the 1960s Vietnam War selling, this is slightly unpleasant, nevertheless a true story, body bags to the US Government! Softly spoken, the man said, “Did you know that I was an active protester against the Vietnam war..... I just saw a legitimate need for my product and supplied it....” He admitted to giving some of his profits to injured servicemen charities. 

Maybe a less palatable and inspiration story, however, it is an example of how some people turn adversary around. Given a miserable situation these people remain optimistic enough to spot opportunities that others are completely oblivious to. 

During the last century's great depression two Wall Street investors Alfred Lee Loomis and his partner and brother-in-law Landon Thorne managed to amass a fortune after the stock market crash of 1929. The two had been leading financiers for the new electric power industry in the 1920s. Loomis was also a scientist, and he became a major supporter of some of the century's greatest scientific minds at his Tuxedo Park home. By early 1929, the two partners had liquidated all their stock holdings and put the gains into long-term Treasury bonds and cash. The reaction by their peers, so many of them forced out of business, seemed more like envy than admiration since "in the midst of so much despair, with the economic situation deteriorating day after day, Loomis and Thorne continued to profit handsomely," writes Jennet Conant, author of the Loomis Biography Tuxedo Park: A Wall Street tycoon and the Secret Palace that changed the Course of World War ll.

So during the last great depression bonds performed well. We know there is an inverse relationship between interest rates and bond prices. Moreover during economic down cycles interest rates are kept deliberately low by central banks with the aim of stimulating investment and the economy. So interest rates were low during the depression and bond prices also soared. High bond prices also pulled bond yields sharply lower during the last depression. For instance, the prime corporate bond yield average went from 4.59% in September 1929 to 3.99% in May of 1931. By June of 1938 the average corporate bond yield fell to a new low of 2.94%. Bonds returned 6.04% during the 1930s securities or bills returned 3.39% over the same time period. You might be right in believing that there are some striking similarities with the way interest rates, bond prices, gilts, treasuries and yields are performing now to that during the great depression. 

The obvious risk of investing in debt is that the debtor might default and that regretfully also happened during the great depression. The history books identified a number of cash-strapped corporations and municipal governments defaulted on their debts during the great depression.

Perhaps if the economy takes a turn for the worst and investors see central banks shy away from interest rate hikes, the gilt and treasuries might still continue its rally. Why? Simply because it’s a safe-haven play. Bearing in mind UK and US sovereign debt score top credit ratings and are formidable nuclear military powers the likely hood of them being invaded by a foreign power is so remote it’s probably not worth considering as a risk. So if investors flock into gilts and treasuries the trend of a gilt/treasury rally will probably continue with a corresponding fall in yields.

Owning your own property without a mortgage or managing rental properties is considered sound during a depression or recession. A place to live is a necessity, irrespective of what economic cycle we are in. With banks hesitant to rent during a sharp economic downturn there's usually a pool of good renters. Although real estate is less of a liquid asset, particularly so during a recession/depression it’s harder to liquidate, nevertheless history shows in the long-term it has been a good asset. Obviously, location is important with tenants paying more if it’s near good schools.

Precious metals such as gold, is another recession, depression proof asset which also performs well in times of geopolitical tensions. However, buying into an already inflated asset has its risks, If you can pick this precious metal up at the support levels, even better. Silver, seems to be neglected at current prices USD19.5 spot troy ounces and might represent value if things go pear shaped. However, silver is a smaller market and can be more volatile than gold.

Keep aside three to six months of living expenses in cash if something unfortunate happens, such as a job loss or unexpected expense might help you keep a cool head to invest wisely and try and spot opportunities were others don't.



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