Thursday, January 5, 2012

Ron Paul's Investment Success Is Driving WSJ Crazy

WSJ just can't deal with the fact that Ron Paul, by buying gold and silver stocks and thus betting against the Fed, has most likely the best performing portfolio of any congressmen ever.

They are out with, amazingly, another hit piece on his successful portfolio. At one point, they suggest they don't know it is a huge success:
Many of Rep. Paul’s supporters protested, in their comments, that his portfolio has already been vindicated by its performance.

It isn’t that simple.

Congressional financial-disclosure forms report holdings only in wide dollar ranges (for example, $15,001 to $50,000). If Rep. Paul owned gold bullion, estimating his investment performance would be fairly easy. But he doesn’t; he owns gold-mining stocks instead. And since the size of each stock holding is disclosed only within a broad band of valuation, there’s no way an outside observer can derive a long-term rate of return for Rep. Paul’s portfolio (or for any other member of Congress, for that matter).
Puhleez. If anything, Ron Paul's gold stocks likely out performed gold.

When I met up with Dr. Paul last May, I was simply stunned by his knowledge about the stocks he owned. I know a lot of gold stock investors, who simply load up on gold stocks, not knowing much about what is going on at the companies.Not Dr. Paul. He understood the philosophies of the management of the companies whose stocks he owned and why the companies employed the strategies they did.

Warren Buffett always talks about concentrating investments in areas you understand, rather than diversification. WSJ never calls Buffett's philosophy weird. Yet, when WSJ discusses, Dr. Paul's investment concentration, they headline the story: How Weird Is Ron Paul’s Portfolio?

WSJ begrudgingly did have to admit that the strategy is a success:
There isn’t much doubt that Rep. Paul’s portfolio has outperformed the U.S. stock market as a whole. Ten years ago, the NYSE Arca Gold BUGS Index, a basket of stocks in mining companies, was at $65; this week, it’s at $522. That’s roughly a 23% average annual return; over the past decade, by contrast, the Standard & Poor’s 500-stock index, counting dividends, has returned some 2.9% annually.
Yet, they go on to say:
Rep. Paul’s supporters admire him for the consistency of his political views. But if the future happens to unfold in ways he doesn’t expect, then his hot investment portfolio is likely to go cold in a hurry.
Huh! Ron Paul is the number one expert in Congress on how central banks destroy the value of the currency they control. The Federal Reserve is no different. As WSJ writes about the future possibly being different, Ben Bernanke is assuring that Ron Paul's portfolio will have huge gains into the future. The Fed is printing BIG. Over the last six months the money supply (M2) has increased at an annual rate of 14%.  Yet, nowhere in the WSJ piece is their mention of the Fed's responsibility for the success of Congressman Paul's portfolio or any explanation of how gold goes up as the Fed destroys the value of the dollar. Some analysis.


  1. Robert did you see these?

    YouTube - Iowa Caucus 2012: GOP Establishment Steals Votes From Ron Paul, Voter Fraud? 1/2

    YouTube - Iowa Caucus 2012: GOP Establishment Steals Votes From Ron Paul, Voter Fraud? 2/2

  2. Peter Schiff should offer a Ron Paul basket haha!

  3. Such insight from WSJ:
    If the stock prices go down, they'll be worth less...
    Wow, whooda thunk?
    Not that they will, of course.
    And this is the "go to" source for financial news??

  4. They stupidity of these buffoons is at first laughable, and then upon reflection, quite sad. They have either abandoned the free market and America, and are with foresight and mal-intent, disseminating outright fraudulent information to support their criminal masters (probable). Or, they are mindlessly regurgitating the Keynesian drivel they have been taught (possible). Either way the result is the same. They are clueless.

    [Don't you know that even as they write this crap, they are secretly out buying all the gold and silver they can get their hands on - even an idiot knows to run from a speeding train...]

  5. If only the WSJ wasn't such a statist publication. We could then take them seriously.

  6. Great article. I think the WSJ types simply can't handle a mere medical doctor and "crazy" austran advocate taking the big shot wall street financial experts to the cleaners over a decade long period!

  7. That's a nice idea Jaison. I would buy! :)

  8. Ron Paul definitely has a concentrated and risky portfolio. But it's actually not that much riskier than most people's portfolios, which are concentrated in long positions in U.S. stocks and bonds. Diversification is the one true "Free Lunch" of investing. But if a person starts with just considering long stocks, bonds and real estate as being the only portfolio options, then true diversification cannot be achieved. I discuss this throughout my best-selling book and am pleased to provide a complimentary link to the final chapter where I present the performance of a specific "Free Lunch" portfolio at:

  9. These days journalist should be quoting Jim Rogers, not Warren Buffet.

  10. Geez. I wish I had that much knowledge about investing in gold stocks. I'm just learning and starting by buying gold in Denver at hopefully a decent price.