Where to Invest Now? Three Paths to Real Wealth.

by | Mar 30, 2001 | Archives

The average U.S. share price has fallen 20% in the past year. So what? This average may be true. It may also be true that most stock markets around the world are suffering consolidation after the longest bull market yet. Plus every past indicator suggests this retraction will last for years. Yet think about this…


In the U.S. market, the food and household product sector rose over 20% in this last year. Beverage and tobacco shares jumped 35% and the aerospace sector has risen 43%.

Look abroad. Every major stock market index dropped in the last year, except Austria (up a modest 4.2%). However some emerging markets rose. South Korea has risen 19.7% in the last three months and the Russian market is up even more (22%)!

Last week the Istanbul stock market and the Turkish Lira rose dramatically.

It is not what markets are doing that counts. It is what you know and how you act. The ups and downs of markets have almost nothing to do with your success at all.

Just because the world economy is consolidating does not mean you cannot increase your wealth. In fact recessions and depressions are the best times to rake in cash.

Here are three principles for making wealth that can help your investments and business excel in periods when everyone thinks things are tough. These principles relate to three ways you can build real wealth. They are organization (an example is Jack Welsh at GE), innovation (Bill Gates) or taking risk (George Soros). Most mega wealth comes from successfully undertaking all three of these wealth opportunities at once.

For assured success though, even more fundamental rules must be applied to these three opportunities. First, invest in what you know. Invest with people you like and trust and look for companies that have a unique competitive edge. Invest in areas that have growth potential.

Many investors miss real growth because they look too much in the past. For example during this crash of the technology sector, many investors may buy shares like Microsoft, Intel and Lucent thinking these blue chips are temporarily down and will rise once again. They may but in the next industrial wave they will not be the big leaders.

In my last messages about investing for example I wrote about the potential for investing in air, water and wood. These industries will be big! The upcoming industrial era called the Dream Society, will experience dematerialization of demand. Things (material goods) will be out of mode.

Natural resources, vitality, health, good looks and simplicity will enjoy growth.

Take for example a survey in Town & Country magazine where rich and famous people were asked what luxury was. Do you think that champagne, caviar and luxury yachts topped the list? No. Things are going out of fashion. Luxurious things are “just stuff”. Things money cannot buy now top the luxury list. For example conductor Andre Previn said luxury was a home without phones. Other items on the list included a garden, a raspberry bush, living next to a young child, time, being able to read the whole paper in the morning, walks with the dog and long lunches with friends, a clothesline, rain on the roof, a good old fashion snow storm, a roaring fire, a jigsaw puzzle and the inability to go anywhere for a couple of days.

Youthful looks is another dematerialized demand that will grow. 9% of the women between the age of 55 and 64 have had cosmetic surgery and 16% more expect. As baby boomers (the oldest are now 54) reach this magic age, there will be an explosion in this field.

So how can you use the unique knowledge you have to cash in on this information?

Use the concepts of “Inspired Investing” and look at how your own business or investing relates to these ideas and what you know. How do you interface with wind, wood, water, simplicity, health or aging?

Use this understanding and the evolutionary cycle of business to expand the knowledge you have. Let your current knowledge create ideas, let the ideas build enthusiasm which leads to education. Use the education to take action and the action will result in a profit or loss. Whether profitable or not, you will gain information and this new knowledge leads to more ideas so the whole process can start over again.

How can you organize, innovate or take risks in these areas? Figure these out and you may be among the next waves of millionaires and billionaires that come along.

You will also find that when you get on the right track your luck magically improves. I stumbled on this fact as I learned these rules by accident, by following what I knew about conducting seminars (which I have been doing for over thirty years). I bought a farm to create an atmosphere I thought would be better for learning. Yet I ended up with a place full of wood, water and fresh air, with houses lacking phones and gardens, raspberry bushes, clotheslines, roaring fires, rain on the roof and when the snow storms come we often cannot go anywhere for a couple days. When I sign off I have time to read the whole paper and then go walk the dog!