Before you get sucked into reading more of my blather, take a moment and read the Wall Street Journal if you’ve got a copy nearby or an online subscription — not the whole thing, but read Christopher Mims’ column The World Isn’t as Bad as Your Wired Brain Tells You. It’s an unusually brief and clear piece about a few of the biases and irrational thought processes that addle most of us… Availability Bias, Extremety Bias and Confirmation Bias go a long way toward explaining why newsletter pitchmen are so successful at getting us to sign up for their get-rich-quick ideas or scare us into hiding in the basement, why patently absurd conspiracy theories are so rapidly adopted as “real” online, and why everything in media, from Facebook to the great MSNBC/Fox News shouting match, is designed to show us more of what we already have a tendency to agree with. Probably the best thing for our democracy would be if we all agree to stay off of Twitter and Facebook for six months and read only thoughtful and edited journalism and communicate with other people only in person.
Except for Stock Gumshoe, of course, you should keep reading our stuff. Every day. And telling your friends. And clicking on all the dumb ads on our pages so we can finally get that solid gold bathtub I’ve had my eye on.
And the other thing I think you should read this week is a bit more challenging, and older, but I find it illuminating — Ben Hunt’s Epsilon Theory is one of the more thoughtful publications I read, mostly because of his ability to dive deep and explain both the human (and market) need for narratives that drive things, and the way those narratives are formed over time. This older piece wasn’t really about that, though: I recently went back and read his piece on Magical Thinking from 2016… it’s really pointed at the Federal Reserve and the Taylor Rule and the populist movements as a reflection of human irrationality, turning an idea or a formula into a belief system, but I think it’s a good reminder to us all to step back from belief and focus on real life sometimes.
So that’s two new perspectives for you for some long weekend reading — if you’re like me, you’ll get sucked into Ben Hunt’s writing and read Epsilon Theory for a few hours… but whatever it is you do, hopefully we can all open our minds a bit and turn off CNBC and the social media echo chambers and do some thinking for a few days.
What, then, comes to mind as we finish the last week of summer — or at least, the Gumshoe definition of summer? (we usually slow down publication in July and August and ramp back up in September, so I’ll be coming at you just about every day again starting next week… exhausting us both.)
Well, I thought I’d spend a few minutes responding to and opining on marijuana stocks, courtesy of a Banyan Hill ad focused on that market and the deluge of varying questions I’ve gotten about pot stocks in general… then I’ll update you on what happened in the Real Money Portfolio this week.
So… Marijuana first.
The ad that caught my eye was a “presentation” called “Marijuana’s US Tipping Point” by Matt Badiali and Jeff Yastine, pitching Badiali’s Real Wealth Strategist (which, similar to some recent offerings I’ve looked at from other Agora publishers, is a low-cost subscription that both renews at higher prices and includes a “free trial” of a newsletter you didn’t ask for, in this case The Bauman Letter, that they’ll automatically start charging you for after a few months… so if you don’t do anything, your $79 sub to Real Wealth Strategist soon becomes a recurring $176 a year, or whatever they choose to charge in the future).
The ad is all about “how you could turn a $50 starting stake into an early retirement by riding medical marijuana’s wave of legalization,” and that’s a fairly typical promise for all kinds of newsletters, built on this mythical idea that you can somehow ladder your windfall investments — turning $50 into $500 in some hot penny stock, then that $500 into $12,000 by picking another extraordinary winner, then betting that $12,000 to win $40,000, and pretty soon you’ve got a couple million dollars and can retire! Yay!
Assuming, of course, that your children didn’t have you committed for doing something as irresponsible as “doubling down” on every single risky penny stock speculation you make (since, as you probably figured by now, just one 90% drop as you’re building on those imagined profits causes this mythical tower to crumble all the way back down… and there’s always a 90% drop at some point when you’