How to Beat the Central Banks: Sell Cash, Buy Stocks

There are two ways to lose money — loudly or quietly.

If we have to lose money, our preference is to lose it loudly.

If we’re losing money, we want to know about it.

We want it to be a reminder to not do something stupid.

You should feel that way too.

The worst way to lose money is quietly. So quietly that you don’t even know it’s happening.

But it’s the approach some of the world’s most influential people are lobbying for right now…

Of course, no one wants to lose money.

Given the choice between winning and losing, only a lunatic would choose losing.

The only instances we know of folks being happy about losing money is in the movies — The Million Pound Note, Brewster’s Millions and the musical Springtime for Hitler in Mel Brooks’ hit movie The Producers.

That’s the movies. Most normal people would pick winning money every time.

But then ‘normal’ isn’t a word you can use when it comes to talking about central banks.

The opportunity cost of losing money quietly

When it comes to losing money quietly there are a number of ways to do it.

One way is to buy a big blue-chip stock and then watch it slowly drift lower and lower over time.

You won’t sell it because it’s a blue-chip.

You don’t want to sell it because you’re not a ‘trader’. You’re a buy and hold investor.

And you don’t want to sell because it will cost you in commissions. In effect you decide that you’d rather lose $1,000 by staying in a dud stock than spending $20 in commission to sell the dud stock.

So you’ll stay with it…and stay with it…and stay with it.

Before you know it, over one, two or three years a big chunk of your portfolio has gone nowhere. Or worse, it’s gone down.

That’s especially bad news in a rising stock market. They have a fancy term for that in economics — opportunity cost.

The opportunity cost of holding on to a dud stock is that you potentially miss out on investing in a better stock.

That’s a bad way to lose money. But there is a worse way. It’s the way the International Monetary Fund (IMF) would like you to lose money.

A banker’s best friend

The IMF is the ‘central bank of central banks’.

Read the rest of this article at Money Morning