January 25, 2007 – Well this week’s casual Friday Blog is not so much a blog about investing & martial arts as it is a blog about the investing & the film The Matrix. The Matrix is one of my favorite movies because besides the dialogue being so stellar, much of the Matrix is an allegory for real life. As in the movie, where millions are deceived by a computer generated grid called the Matrix, in the stock markets, an Investment Matrix exists that millions of investors follow that has no resemblance to reality as well. To get started, let’s take a look at some actual dialogue between Morpheus and Neo as they ponder the conundrum of the Matrix.
A SCENE FROM THE MATRIX
Morpheus: I imagine that right now you’re feeling a little like Alice, tumbling down the rabbit-hole…I can see it in your eyes. You have the look of a man who accepts what he sees because he is expecting to wake up. Ironically, this is not far from the truth…Let me tell you why you are here. You’re here because you know something. What you know, you can’t explain. But you feel it. You’ve felt it your entire life. That there’s something wrong with the world. You don’t know what it is, but it’s there, like a splinter in your mind, driving you mad. It is this feeling that has brought you to me. Do you know what I’m talking about?
Neo: The Matrix?
Morpheus: Do you want to know what it is?
Morpheus: The Matrix is everywhere. It is all around us, even now, in this very room. You can see it when you look out your window, or when you turn on your television. You can feel it when you go to work, or when you go to church, or when you pay your taxes. It is the world that has been pulled over your eyes to blind you from the truth.
Neo: What truth?
Morpheus: That you are a slave, Neo. Like everyone else, you were born into bondage, born inside a prison that you cannot smell, taste, or touch. A prison for your mind. Unfortunately, no one can be told what the Matrix is. You have to see it for yourself. (Produces a box containing two colored pills, one blue and one red.) This is your last chance. After this, there is no turning back. You take the blue pill, the story ends, you awake in your bed and believe whatever you want to believe. You take the red pill, you stay in Wonderland, and I show you how deep the rabbit-hole goes. (Pause. Neo reaches for the red pill.) Remember: all I’m offering is the truth, nothing more. (Neo swallows the red pill with a glass of water.)
Everyday, here is the parallel scene that I see played out in the investment matrix.
THE INVESTMENT MATRIX
The maalamalamaâ„¢ Oracle: I imagine right now that you feel betrayed and a little out of control, like a driver in a car that has no brakes. Every time the financial media and the chief advisors at your firm touted the stock markets’ success at the end of 2006 as a reason to invest more money, you believed them so you gave them more money. Even now as some of the major world markets begin to show signs of weakness, signs of the fact that the market’s run at the end of 2006 was just an illusion, they continue to tell you not to worry. That this is just a blip on the horizon and that any dips in the market are opportunities to buy even more. Though you believe them, underneath it all, in the pit of your stomach, you know something is wrong. You feel as if you are buying into the wrong things even though everything is still rosy now. It gnaws at you and keeps you up at night, knowing that you have put your entire financial future in the hands of men and women whose job it is to get you to hand your money over to them. You know something is wrong and that is why you are here. Do you know what I am talking about?
Joe & Jane Investor: The Sales Pitch?
The maalamalamaâ„¢ Oracle: Yes. Do you really want to understand exactly how the Sales Pitch works?
Joe & Jane Investor (nods)
The maalamalamaâ„¢ Oracle: The Sales Pitch is everywhere. You breathe it, you sleep it, you bathe in it. From the moment you wake up until the moment you fall asleep, you can not escape it. It’s in magazines, newspapers, TV shows, and it escapes the mouths of financial advisors, all of whom have been trained with the single purpose of robbing you of your sense and instilling in you a sense of complacency. It imprisons you. It enslaves you if you will. It robs you of all capacity to think critically and blinds you of any capacity to see the truth as it really is. If you could see the truth, really see the truth as I do, you would ask of yourself, “What am I doing?”
Joe & Jane Investor: What truth?
The maalamalamaâ„¢ Oracle: That the investment matrix is a drug of happiness. It will always be positive even when things are negative. It will work tirelessly to convince you that things are good. That you should be investing more money in the markets. That stocks will continue to rise. The truth is that many financial journalists, writers, analysts and firm-employed economists are nothing more than highly-paid cheerleaders. These men are paid to reinforce your dreams, your hopes, and to tell you that everything will be rosy. They are part of the drug that you ingest that it courses through your very veins as I speak to you. Cheerleaders are paid to cheer. Give people a dose of reality that may serve as a sobriety check when they are giddy and you annoy them. You irritate them to the point that they will leave you as a client, unsubscribe to your newsletter, and stop reading you if you are a blogger.
Nobody wants to hear that they had better prepare for a crisis when things are rosy. Nobody wants reality because the drug that pumps through your veins is so good that it has left you incapable of proper judgement. We have noticed that some of our least read articles are those that contradict the overwhelming market sentiment at the time, and while they are among the most helpful of all of our blog entries, they also tend to be the least read. In the Investment Matrix, you will actually sell less with the truth than with a bunch of lies. Cheer away, tell the people want they want to hear, lie, lie, lie, and your wallet will grow fat. People have become accustomed to lies that the truth makes them squirm.
Joe & Jane Investor: So where can I find the truth?
The maalamalamaâ„¢ Oracle: I offer you the truth right here. Nothing less. Nothing more. Yet you will refuse to listen because you have been so well conditioned by the Investment Matrix that the truth can literally be under your nose and you will not recognize it. Or perhaps you will see it, but choose rosy falsehoods instead, because you do not wish to experience the unpleasant feelings generated by the truth. But this is only because the Matrix has prevented you of knowing ways that you can benefit from financial and economic disasters. But shift into non-traditional assets, and you will grow wealthy even when markets are performing poorly.
I know that many of you have refused the truth in the past because only a handful of you last year told me that you benefited from our calls on the U.S. dollar and in gold. I do not need to be an oracle to tell you this. Even when the truth was right in front of you, in black and white, in my newsletters and blog articles, many of you read them but refused to believe them because perhaps 28 out of 30 Wall Street analysts said something that opposed my viewpoint. Or perhaps every major newspaper or talking head you saw on TV opposed my view. But that is the strength of the Investment Matrix. The overwhelming numbers of demagogues. Bombard the masses with falsehoods and they become slaves to your lies. You fell victim to the Investment Matrix and could not believe the truth even as it stared you in the face.
For example, consider the dead-on accuracy of our gold calls for the past six months, what we’ve been telling you for weeks about the surging global markets, and consider what we’ve told you just last week regarding Apple stock (through our newsletter). Yet everything looked rosy back then so nobody wanted to hear the truth. Think about what we’ve said for well over half a year now since our newsletter went live in mid-2006 about gold. Think about everytime gold has had a dip, how the financial bears come out in full force, calling for huge declines in gold, and think about how we have not wavered regarding our long-term outlook on gold. Not once. We are not cheerleaders like the demagogues. The cheerleaders produce great cheers for the demise of gold everytime gold dips because that means more falsehoods can be disseminated about the long term prospects of stock markets with weak fundamentals.
So in the end, you can take the blue pill and believe whatever it is you want to believe. Or you can take the red pill, the maalamalama curriculum, and I’ll take you as far down the rabbit hole as you wish to go. Bu know that once you do, there is no turning back. You will no longer be able to see the financial markets as you did before but you will see them as they really are.
J.S. Kim is the founder and Managing Director of maalamalama, a comprehensive online investment course that uses novel, proprietary advanced wealth planning techniques and the long tail of investing to identify low-risk, high-reward investment opportunities that seek to yield 25% or greater annual returns.