Letter to Clients about Gamestop – November 2022

Hey Everyone,

As my client, I want to make sure you hear from me, since we’re experiencing such a dynamic financial environment these days. By all means, we can schedule a time to talk, but with the understanding that we’re all very busy, it’s important to connect however briefly.

I have a Netflix recommendation for you. I recently watched the series “Eat the Rich.” You gotta see it if you haven’t already. It is a documentary about the people who became believers in Gamestop and the events surrounding its meteoric financial runup. I won’t give away the suspenseful twists and turns, but it is an epic story, and I found out there is much I didn’t know. The main characters in this David vs Goliath tale are hedge funds and their filthy rich managers, the internet-based and virtuously named stock trading platform Robin Hood, social media influencers, anonymous yet savvy internet researchers and contributors, and thousands of little-guy investors who were content even to lose money if it meant taking down the fat cats.

There is much to take away from this series, but one concept that really struck me was how much the movement of a stock, or the market in general, doesn’t have anything to do with company fundamentals, balance sheets, profits, or even knowledge! Tens of thousands of people gambled tons of money, some even their life savings, on a company that was basically a financial corpse. Most investors had no idea about the financial strength of Gamestop, some didn’t care, and some didn’t even care if they lost money! Now, how do you succeed in a market under these rules of engagement? How is this not gambling? And how much of your retirement nest egg like your 401(k) do you really feel comfortable putting at risk in a financial environment where completely unknown online personalities like “Roaring Kitty” have the ability to drive a company you’re invested with to the moon or into the dirt?

Here is the more important financial concept, in my view: with this kind of insanity going on, can you see how building a war chest of money that you have easy access to can allow you to participate in this volatile and perilous environment, but in a way that you cannot get crushed? What you have building in your cash value whole life policy right now, your “bank,” is growing safely; efficiently; tax-free; is liquid and accessible for anything, at any time; is private and not monitored by the government; and provides a valuable death and chronic care benefit. It’s doing just fine on its own, thank you very much.

But what about when a solid company, or fund, or financial sector comes crashing down due to external events like an overall stock market crash or other black swan event? If you’re a fan or interested in crypto, what if Bitcoin falls not just 50% but 90? What if the housing market crashes because people with variable interest rate loans that were 3% are now 10% and prices fall hundreds of thousands of dollars? Can you see how being positioned correctly can allow you to turn all that saving you’ve been doing into a huge financial windfall?

That’s what we have been creating together. Some, actually most of you, have only seen the savings part so far, and have yet to experience substantial growth or the leveraging potential of this strategy. But our time is going to come! And from the looks of things, I think those opportunities are going to be here soon.

Thank you for your business and trust, and for keeping on this course. If you’d like to have a live conversation in the near future, please let me know and I’ll zap you to the top of the list.