John Galt: Why Investors Should Know His 3 Principles for Making Money
by Dr. Mark Skousen, Chairman, Investment U
Tuesday, March 13, 2007 Issue #650
This month celebrates the 50th anniversary of Ayn Rand’s gargantuan novel Atlas Shrugged, an uncompromising defense of capitalism, laissez faire, and individualism.
Ayn Rand is honored almost universally as the fountainhead of market capitalism. Her theme is that genuine universal prosperity is only possible in a free-market peaceful environment.
Her novel is a philosophical call to arms – to resist the collectivists and their penchant to tax, spend, and regulate our lives, and slowly but surely take away our freedoms. And if it gets bad enough, to go on strike and even strike back by an organized underground resistance movement.
Introducing John Galt
John Galt and the rest of Rand’s hero-entrepreneurs are high-minded, principled achievers who relish the competitive edge and have the creative genius to invent exciting new products, manage businesses efficiently, and produce great symphonies without cutting corners. Such actions are often highly risky and financially dangerous, and are often met with derision at first.
Rand points out that these enterprising leaders are a major cause of economic progress. History is full of examples of “men who took first steps down new roads armed with nothing but their own vision.” (This quotation from The Fountainhead was selected by Walt Disney at his American exposition at EPCOT.)
In Atlas, protagonist Hank Reardon defends his Randian philosophy before a court: “I refuse to apologize for my ability. I refuse to apologize for my success. I refuse to apologize for my money.”
John Galt’s Three Principles for Making Money
I suspect that companies run by John Galt and other principled, creative geniuses would make a lot of money for investors. If these characters in Atlas Shrugged were investment advisors, what would they recommend?
- First, take responsibility for your own trades. Whether you make money or lose money, you should relish the fruits of your labors when your stocks go up, and not blame others when your investments decline.
Granted, you may have learned of an investment idea from a stockbroker, newsletter writer or TV personality, but only you can be blamed if the stock goes south. Ultimately, it was you who decided to use that broker, subscribe to that newsletter writer, or watch that favorite financial program. Wise investors use several sources and then make their own investment decisions.
- Second, bad government policies can damage your portfolio. In Atlas, the trains stopped working because of stifling government regulations and powerful bureaucratic unions. Excessive controls destroy the entrepreneurial spirit and kill bull market. When the Sarbanes-Oxley law was imposed on Wall Street, not surprisingly, most new IPOs went abroad, to London. Since the terrorist attacks in 2001, foreign stock markets have far outperformed the U.S. markets. Why? Because of increasing burdens on business here in the United States.
- In Atlas Shrugged, investors and capitalists simply gave up and withdrew from society, disappearing like Howard Hughes. But in today’s world, investing in freer countries abroad is a better alternative.
Third, when all hell breaks lose, look to gold for your ultimate protection. In Atlas Shrugged, the symbol of freedom at Galt’s Gulch – the safe haven for all Ayn Rand’s heroes – is the Gold Dollar.
- In Atlas Shrugged, investors and capitalists simply gave up and withdrew from society, disappearing like Howard Hughes. But in today’s world, investing in freer countries abroad is a better alternative.
- In Atlas Shrugged, investors and capitalists simply gave up and withdrew from society, disappearing like Howard Hughes. But in today’s world, investing in freer countries abroad is a better alternative.
Third, when all hell breaks lose, look to gold for your ultimate protection. In Atlas Shrugged, the symbol of freedom at Galt’s Gulch – the safe haven for all Ayn Rand’s heroes – is the Gold Dollar.
Conclusion
Gold is the best hedge against man-made crisis and inflation. Look how well gold has done since 2001, when the “war on terror” was declared. It’s almost tripled in value. That’s a heck of a lot of profits, and the way things are going, more profits are on the way.
Good investing,
Mark
Today’s Investment U Crib Sheet
- New! The Investment U research team just published its latest precious metals report, which includes the best ways to purchase gold. Read the full report Gold Forecast: Gold’s Bullish Comeback In 2007: 6 Ways To Tap Into the “Second Leg” of Mega Profits.
- Mark recently wrote about a “principled, creative genius” running one of today’s most successful companies – billionaire Charles Koch (Investment U #645). And for more on investing in free-market economies around the world, take a look at Investment U Issue #633, The Economic Freedom Fund: Another Breakthrough In Free-Market Investing.
- Is Bill Gates the New Ben Franklin?
- Best Invention of 2008: Apple (Nasdaq: AAPL) App Store
- Gold’s Two-Faced Disappointment
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