How to be a Scrooge Investor During the Holidays

“Save your money, nephew! Pennies saved today are dollars in your pocket tomorrow!”

— Uncle Scrooge McDuck

Today, I appeared on CNBC with Rick Santelli to talk about the economy, the Santa Claus rally and Bitcoin euphoria. Watch the three-minute interview here.

One of the traditions during the Christmas holidays is to read Charles Dickens’ famous book “A Christmas Carol,” or to watch one of the many film productions about the miserly Ebenezer Scrooge who turned his life around and became a generous soul on Christmas Day.

When I was growing up, one of my favorite comic book heroes was Uncle Scrooge McDuck, who was created and drawn by Carl Barks. I have a signed poster of one of Barks’ drawings, which features Scrooge McDuck diving into his money bin. I’d like to think that, subconsciously, this comic book hero encouraged me to be successful in life.

As a child, I was fascinated by Uncle Scrooge, his adventures with his three nephews, his ingenuity in discovering new ways to make wealth and his ability to thwart the schemes of the thieving Beagle Boys.

I have endeavored to pass along these boyhood memories and lessons to my children and grandchildren.

Here I am reading about Scrooge McDuck to four of my grandchildren. 

The photo above shows me teaching four of my grandkids about money by reading Uncle Scrooge McDuck on Thanksgiving. Each child is holding an American Eagle Silver Dollar, part of their money bin! The issue, “Uncle Scrooge McDuck on Money,” is a first edition, released in 1966, and is written and illustrated by Carl Barks.

Dickens’ character of Ebenezer Scrooge was a miser, but Uncle Scrooge McDuck was more like “The Richest Man in Babylon.” He watched his expenses, but didn’t just sit around counting his money. Instead, Uncle Scrooge McDuck put it to good use by creating new businesses and investing in successful enterprises.

I even wrote a financial book based on his character called “Scrooge Investing” in the 1990s, which went through several editions. (Sadly, the Walt Disney Company refused to give me permission to use any pictures of the Disney characters in the book, even though Scrooge McDuck is no longer in vogue in Disney films or theme parks.)

Scrooge Investing Updated

The best advice I can give people, both young and old, is always to live within your means, put your savings to productive use and be generous with your profits. For some, that means investing in your own business. For most people, though, it means controlling your budget, minimizing your debts, having a regular savings program and investing wisely in the stock market.

Yes, the stock market is high, but it could go a lot higher before a bear market develops.

From ‘Scrooge Investing’ to ‘Maxims of Wall Street’

“Scrooge Investing” is now out of print (the last edition was published in 2000). The best alternative is my collection of financial sayings: “The Maxims of Wall Street,” now in its 5th edition with over 25,000 in print. You would be amazed at how valuable a single quote or two can be in your life, such as this one: “Economy is a great source of revenue, and no revenue is sufficient without it.” (A combined quote of Seneca and Ben Franklin).

Today on CNBC, I quoted two famous lines that are applicable in current markets. The first is from Sir John Templeton: “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.” I think we’re now between stages #2 (skepticism) and #3 (optimism), so we have more profits ahead.

The second quote is “Nobody is more bearish than a sold-out bull.” You can apply that to anyone who has sold his position and moved into cash, or missed out on a bull market opportunity like Bitcoin.

Dennis Gartman endorses my “Maxims of Wall Street” book.

Commodity guru Dennis Gartman is a big fan of “The Maxims of Wall Street.” He offered the following endorsement, “’You have to get this book, the ‘Maxims of Wall Street.’ I have a copy on my desk and read it every day. In this wonderful book, you can find the common sense you need to trade and invest every day.  Whenever I get confused about the market, I flip it open, read one page or two and say, that makes sense!”

Still Time to Order by Christmas — and Get Half Off!

If you buy on Amazon, the price is $24.95. I’m offering it for only $20 for the first copy, and all additional copies are only $10 each. A half-off special. Or buy a whole box (32 copies) and pay only $300. I pay postage and autograph each copy. It’s the perfect gift for the holidays to friends, family and clients.

To order, call Harold at Ensign Publishing, toll-free: 1-866-254-2057, or go to www.miracleofamerica.com. (Note: Add $15 if you are ordering from outside the United States. All copies are sent via airmail.)

In case you missed, I encourage you to read my e-letter from last week about whether the Bitcoin mania is for real.

You Nailed It!

For Real Tax Reform, Look at This Booming Nation

The big debate in America recently has been over tax reform.

The latest tax bill is a hodgepodge of tax cuts and increases that would add a thousand pages to the U.S. Tax Code. The only clear winner is business.

Whenever Congress gets around to engaging in real simplified tax reform, the lawmakers should look at Hong Kong as the ideal: No tax on sales, estates, interest, dividends or capital gains, and only a 16.5% tax rate on profits and 15% on individual income. That’s it! Yet, Hong Kong almost always enjoys a balanced budget — and has had the highest growth rate of any country in Asia over the past 50 years.

I’m reading with great interest the new biography, “Architect of Prosperity: Sir John Cowperthwaite and the Making of Hong Kong,” by Neil Monnery (London Publishing, 2017). I highly recommend it.

The author recounts how Cowperthwaite, a long-time financial secretary in Hong Kong (1945-71), doggedly maintained a laissez-faire policy in this small British colony.

Cowperthwaite had a classical education at St. Andrews University and was under the influence of Professor John Napier, a thorough-going Smithian and author of “A Case for Laissez Faire.” Monnery states, “It is clear form Cowperthwaite’s speeches and writings that he was enormously influenced by his study of [Adam] Smith.” (p. 27)

When British authorities came to Hong Kong and insisted on a five-year plan for the island in 1960, Cowperthwaite spoke out against the socialist central planning idea in favor of a decentralized, market-based approach.

Echoing the words of Adam Smith, he wrote, “Over a wide field of our economy it is still the better course to rely on the nineteenth century’s ‘hidden hand’ than to thrust clumsy bureaucratic fingers into its sensitive mechanism. In particular, we cannot afford to damage its mainspring, freedom of competitive enterprise.” (quoted on p. 170)

It is pretty clear that Cowperthwaite and other followers of Adam Smith accepted the big-picture philosophy of laissez-faire that Smith advocated, which he called “the system of natural liberty,” Cowperthwaite essentially ignored the parenthetical mistakes that critics have complained about in Smith’s works (such as his crude labor theory of value, usury laws and failure to recognize marginal analysis).

In many ways, Hong Kong’s Smithian policies have resulted in the greatest economic success story in the history of the world.

What we need today is another Cowperthwaite!