The Iron Law of Investing (ILOI)
by Richard Daughty
The Mogambu Guru
by Richard Daughty: Giggling
Flee Born of Easy, Greasy Greed
distressing thing is a big stink about nothing. It started because
of The Economist magazine, which unfortunately tends towards
that whole ridiculous Keynesian crapola, but which nevertheless,
and, I might add, quite paradoxically, had a very interesting article
buried on page 75 titled "New Model army," with the subheads "Economics
after the crisis" and "Efforts are under way to improve macroeconomic
I immediately involuntarily laughed the famous Mogambo Laughter
of Scorn And Contempt (MLOSAC) at this stupidity of "improving macroeconomic
models," my voice dripping with undisguised scorn and contempt,
as is implied in the title, which was, in case you forgot, Mogambo
Laughter of Scorn And Contempt (MLOSAC).
with this seemingly pointless narrative, I laughed and laughed and
laughed beyond the point where I was still actually amused at the
idea of the government allowing changing the Keynesian strangle-hold
on the economy, until I was finally reduced to loudly dyspeptic
chortling, and with an additional angry, sarcastic, altogether snotty
tone to my voice, going "Guffaw, guffaw, guffaw!"
for some reason, was upsetting to everyone at the office, and they
were saying hurtful things like "Shut up! I'm on the phone here!"
and even my own boss was yelling "Die, you Irritating Mogambo Bastard
(and this is the crux of the matter) there are threats of lawsuits
over alleged flecks of flying spittle, referred to by the Plaintiffs
as Icky Mogambo Cooties (IMC), all according to entirely baseless
allegations where evidence is sketchy – at best! – beyond the dozen
eye-witnesses and those pesky video recordings which have CLEARLY
been altered, by a person or persons unknown, to discredit me.
I cannot wait
to argue my case in court, where my razor-like, legal-eagle razzle-dazzle
will skewer the flimsy case of the whiny Plaintiffs, and expose
them for the ridiculous, libelous and litigious morons that they
are, which I will easily prove by dragging them to the witness stand,
by the hair if necessary or if opportunity arises, and asking each
of them, under oath, "Have you been smart enough to have been buying
gold and silver bullion as part of your investment strategy to protect
yourself against the terrifying, ruinous inflation in prices that
will inevitably result from the insane levels of inflation in the
money supply created by the Federal Reserve so as to feed the gulping,
all-devouring gullet of the enormous, bloated, twisted, sick federal
of course, all tearfully admit under the relentless pummeling of
my pointed questioning that no, they did not buy gold and silver
bullion, and they are ashamed.
As an aside,
this is to be expected because they are members of "the majority
of people," and there is an Iron Law Of Investing (ILOI), as in
"inescapable mathematical imperative," that dictates that the majority
of investors MUST be wrong most of the time, making them sure losers
over the long term.
you would have the mathematical near-impossibility of a small minority
of investors losing enough money most of the time to make winners
of the vast majority of investors over the long term! Think about
it and say "Whoa! Ain't nobody that stupid!"
the point, I would angrily bang my fist against the table, and ask
the terrified witnesses "If the majority of investors were actually
right, from where could their profits come, except from the small
minority of investors who, boggling the mind, were monumentally
wrong most of the time over the long haul? And to also pay the enormous
fees, charges, and expenses of the legions of middlemen and the
relentless taxes of a ravenous government? Huh? Where? From where
do you think the money could possibly come? Answer me, puny Earthling!
Resistance is futile!"
At about this
time in my brilliant legal defense, the way I figure it, is when
the judge is screaming for the Bailiff to haul me away and put me
in jail where I never again get to eat delicious beef tacos, with
their crunchy corn tortillas proving the perfect wrapping for a
full layer of crisp, cool lettuce and delicious sour cream, plus
a sweet salsa, whereupon I will wake up in a cold sweat, and then
realize with a note of relief that I was dreaming the whole time,
I am not really a lawyer, and the only things I know about law are
from watching old episodes of Perry Mason on TV ("Objection, your
Honor! This testimony is incompetent, irrelevant and immaterial!"
"Objection sustained!" says the judge).
reason for my laughing so uproariously in the first place is that
any "improvement" in the current Keynesian econometric stupidities
will only be "allowed" if the "New! Improved!" models show a gnawing
need for even MORE insane creations of money and credit, and a bigger
and bigger government to regulate more people and businesses, and
an even bigger and bigger government to help more and more people!
Look! I'm laughing
magazine blithely ignores my cruel taunting and disrespectful jibes,
and continues merrily along, as if I don't even exist, gliding over
the fact that Keynesianism is a complete, total failure, and merely
noting that it is a real dud because it does not reflect "the financial
system accurately, nor allow for the booms and busts observed in
the real world."
The big problem
is that the whole basis of Keynesian theory rests on the idea that
economies and economic actors seek equilibrium, when any idiot knows
that systems inexorably tend towards disequilibrium and chaos, as
in obeying the laws of entropy, and it takes energy to keep that
collapse from happening, which is, of course, the opportunity for
The first job
of these patch-'em and fix-'em guys is to, surprisingly then, "put
banks into the models"! Hahaha! I thought they were already in there!
Who knew, huh? Hahaha!
The Economist magazine explains, that banks are NOT already
in the stupid neo-Keynesian econometric models is because "macroeconomists
thought of them as a simple 'veil' between savers and borrowers,
rather than profit-seeking firms that make loans opportunistically
and may themselves affect the economy." They did? Where have they
been for the couple of last decades? Hahaha! Dorks!
I desperately want to know, exactly how DOES one mathematically
describe the variable functions of banks making loans variously
opportunistically, and variously in response to new and various
governmental regulations and/or tax law, variously affecting the
economy, especially when the foul Federal Reserve (a bank!) is permanently
at the heart of it, purposely creating variously monstrous amounts
of excess money and credit to satisfy the always-insatiable, gluttonous,
ravenous appetite of the federal government for deficit-spending
nigh unto bankruptcy and inflationary economic collapse?
Thus we learn
that, if life was fair, this is where The Economist magazine
would have put in a quote from me, perhaps along the lines of "The
Marvelous And Wonderful Mogambo (TMAWM) is quoted as saying 'People
who believe this preposterous neo-Keynesian econometric crap are
morons, and I say this without fear of contradiction because it
is blatantly obvious that it is not remotely possible to create
such a monstrous huge clot of equations and their bastard derived-and-substituted
offspring – with the laughable precision of three decimal places,
for crying out loud! – about something as grossly inexact as human
behavior that didn't have so incredibly much error built into every
tiny piece of it that any real information – if any! – is immediately
drowned out by the deafening statistical noise in such a bizarre,
error-multiplying, iterative system, especially one that is That
Freaking Big (TFB).'"
On the other
hand, one can dispense with the dismal failure of all of that silly
Keynesian hocus-pocus, and the expensive computers needed to run
it, by just making the dollar be gold so that the money supply is
fixed, let the government die and take its onerous, crippling tonnage
of regulatory burden to hell with it, let the free market and sound
money take care of business, and everything will be fine, to which
I say "Hahahaha!" and let go with a hearty guffaw or two if you
think that the government is going to allow that! Hahaha! Guffaw!
is NOT going to happen by a long shot, to protect oneself from the
coming financial disaster, one need merely do the One Smart Thing
(OST), which is to buy gold and silver bullion, as is proved by
thousands of years of history, replete as it is with governments
containing the selfsame traitorous treacheries as the horrid Nancy
Pelosi ("Let's all hurry up and vote for the Obamacare bill so that
we can find out what's it!"), which is the horrifying history of
governments and peoples doing these same, sad, silly, suicidal stupidities
that have now killed us today, as in "We're Freaking Doomed (WFD)."
And with One
Smart Thing (OST) having a fabulous 100% successful track record
like that, how can one NOT buy gold and silver bullion, and oil
stocks, too, and then chortle with a gleeful, gloating self-satisfaction
while doing so?
The while the
use of the phrase "Whee! This investing stuff is easy!" whilst doing
so is, of course, entirely optional, you take it from me, and from
Junior Mogambo Rangers (JMRs) around the world and in this whole
quadrant of the galaxy, that it feels so wonderfully good, to finally
be a guaranteed winner for a change, that the words just seem to
come tumbling out.
Richard Daughty (Mogambo
Guru) is general partner and COO for Smith Consultant Group, serving
the financial and medical communities, and the writer/publisher
of the Mogambo Guru economic newsletter, an avocational exercise
to better heap disrespect on those who desperately deserve it. The
Mogambo Guru is quoted frequently in Barrons, The
Daily Reckoning, and other fine publications. Visit
© 2013 Richard Daughty
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