The greatest opportunities for wealth creation happen during times of crisis.
Take the Battle of Waterloo, for example.
The battle marked the final defeat of Napoleon Bonaparte—the French leader and one of history’s greatest military commanders. It was the most important battle of the 19th century.
In the early 1800s, Napoleon seemed unstoppable. He built an empire that ruled over most of Europe.
After escaping the Mediterranean island of Elba, he was in the process of rebuilding the Empire. But it all ended at Waterloo.
Napoleon’s defeat signaled the end of French hegemony over Europe. It was a critical turning point in world history.
As the story goes, Nathan Rothschild, a member of the secretive Rothschild banking dynasty, took advantage of Waterloo’s unexpected outcome to make enormous profits on the London Exchange.
This reportedly led Rothschild to say: “The time to buy is when there’s blood in the streets.”
Regular readers know this is the essence of crisis investing.
As I’ve said before, it’s how legendary investors like Rothschild became some of the richest men in history.
Casey Research founder Doug Casey is one of the world’s most successful crisis investors. He literally wrote the book on it.
Doug’s book, Crisis Investing, was a New York Times best-seller for 34 weeks. He’s also hit numerous “home runs” investing in crisis markets.
Doug is a friend and mentor. Over the years, he’s helped me hone this profitable investing strategy.
The name of my advisory, Crisis Investing, is a nod to Doug and the roots of Casey Research.
Doug and I trek through battle zones and dodge bullets to find ways ordinary investors can profit from “blood in the streets” opportunities—all through a regular brokerage account.
When there’s a crisis, most people only see danger. But these are actually opportunities. Crises often allow you to buy a dollar’s worth of assets for a dime… or less.
The key is to capitalize on a distortion in the market caused by a crisis. That’s how you turn lemons into lemonade.
We look for situations where everyone else has thrown in the towel… where the sellers are begging for a buyer. That’s when high-quality companies become dirt-cheap. It’s low risk, high reward.
And right now, I think the next crisis is building up in the US.
A Profitable Pattern
With President Donald Trump often at odds with the Deep State, I think a coup d’état may be in the cards.
As I’m sure you know, a coup d’état is when a small group violently overthrows a sitting government.
Coups often produce a moment of maximum pessimism—and real blood in the streets. We’ve seen it happen in Ukraine and Turkey, two countries Doug and I visited in recent months.
As Nathan Rothschild noted, this is the best time to buy.
Doug Casey and I have been to many countries that experienced coups. Some of our most recent trips handed us triple-digit investment returns.
It’s a profitable pattern: coup >> blood in the streets >> triple-digit investment returns.
What to Do Now
So how do you set yourself up for these profits?
As I told my Crisis Investing subscribers (paid-up members can read the issue here), the best place to start is what I call “Dividend Aristocrats.”
These are “best of breed” industry dominators—the sort of company you’d buy for the long term. Think retirement holdings.
These stocks are rarely cheap… because everyone knows they’re the best. It usually takes a major crisis to create bargains. So the chance only comes about once in a generation… if that. But it’s hard to think of a better investment.
So, how will we know when a Dividend Aristocrat is cheap enough?
I think the best way is to compare its current dividend yield to its historical dividend yield. The higher the current yield is, relatively speaking, the more attractive the valuation.
But even with the recent correction in the stock market, we’re not even close yet… We’d need a genuine crisis.
I’ll be watching closely for it. But don’t mistake a skinned knee for blood in the streets.
Editor’s Note: There are practical ways to maintain your financial freedom, even as your home country takes a dive to the bottom. Find out more in our free Guide to Surviving and Thriving During an Economic Collapse.
Until next time,
Senior Editor, International Man
P.S. What steps have you taken to crisis-proof your portfolio? As always, share your insights with us right here.
Tags: crisis investing,