Dear Survivor,
“I don’t understand bonds,” says everybody. Which is a shame because bonds are a pretty nice asset to own right about now, as many of you do if you work with Your Survival Guy.
But here’s the deal. When investors hear what the T-Bill is yielding, their immediate reaction isn’t “let’s buy it.” Their reaction is let’s “beat it.” This isn’t a Michael Jackson song.
As an aside, my family loved MJ: The Musical, which we saw in London last spring before taking the Chunnel to Paris. On a sadder note, one of our favorite lunches there was at the Chiltern Firehouse. It burned down this February and is closed until further notice, and may not reopen.
Getting back to bonds. If you take away one thing from today’s post, it’s that you need money to do special trips. Not a ton of it, but enough. And one sure way to kiss those trips goodbye is to needlessly lose it. When investors reach for yield, they risk their principal.
“Oh, but what about inflation, Survival Guy?” you wonder.
What about it? When you have enough money, you can still afford to buy a dozen eggs. I can’t tell you how many times I hear how tens of thousands of dollars were lost because Mr. Greedy bought something for another half of a percentage point in yield. That’s a lot of eggs.
Investing is emotional. Spending money is too.
“I’m Good at Buying Stocks, But Bad at Selling”
Another thing everyone says is, “I’m good at buying stocks but bad at selling.” It’s why Your Survival Guy doesn’t like to speculate in the stock market. I much prefer the life of an investor, like a gardener, tending to my investments rather than cutting and hacking away at them. Having a finger on one’s risk tolerance is a good place to start that way of life.
But like a lot of life lessons, the difference between an investor and a speculator is taught best in the school of hard knocks. Everyone thinks they’re an investor when prices are up. It’s the keen-eyed investor who sees opportunities when they’re down. What did everyone think stocks do, go straight up forever?
Your Survival Guy uses Ben Graham’s lessons in The Intelligent Investor to define the investor and the proper allocation model of 75-25, stocks-bonds, or somewhere in between. In my conversations with you, a 50-50 mix is a good place to start the discussion. “Oh, that’s too simple, Survival Guy,” you think.
“You will live a life of peace and comfort within 75-25” sounds like something you’d read on a fortune cookie, glance at, and then discard. And yet, it’s something to be studied and guided by.
When you have your life’s savings in a handful of stocks, hoping and wishing they get to a certain level so you can live the good life, you’re setting yourself up for possible disappointment. Remember, for every Bull Market, there’s a Bear hiding around the corner, waiting to rip it to shreds. Doesn’t happen often, but it’s a killer when it does.
The pain of losses far outweighs the euphoria of gains. Live your life with peace of mind and comfort with a portfolio risk tolerance that matches you. Too often, investors realize after the fact that, like a food allergy, their tolerance was an intolerance.
“Survival Guy, What Do You Think About Gold Miners?”
“Survival Guy, what do you think about gold miners?” I’m asked.
“I don’t like them,” I respond. “Because there’s a liar above every hole.”
Knowing whether a miner is going to strike it rich is like saying a certain stock is a sure thing. You just don’t know until you know, and that’s after, not before, the fact. It’s why I like my gold in bullion, not B.S.
Sure, there will be winners. But there will be surprises too. There may be leverage used to juice returns or what have you. Why would I want to take part in any of that with my insurance, which is how I view gold? I wouldn’t. This is a corner of my portfolio for safety, but given that, I know gold can also lose value because it trades in a “market,” and markets are opinions, too.
Think of your gold as a safe haven and not something to get rich from. Keep your target percentage allocation in the single digits. Don’t make it the star of your portfolio. It plays a role in your diversification, which may be the only free lunch in investing.
Have some gold bullion for times like these. But if you ask Your Survival Guy, I’d tell you, “I’m not betting the ranch on it.” Email me at ejsmith@yoursurvivalguy.com to see how gold may work in your portfolio.
Survive and Thrive this month.
Warm regards,
“Your Survival Guy”
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P.S. Your Survival Guy just finished reading The Lions of Winter by Ty Gagne, the true story of two young climbers who lost their way in extreme weather on Mt. Washington in January of 1982. The 4-days that followed changed the future of New Hampshire search and rescue.
Having personally skied Mt. Washington’s Tuckerman’s Ravine a handful of times, I can tell you how quickly things can change at the home of the “worst weather in the world.” And I was there in the spring, not early winter like these two.
Reflecting on this harrowing rescue attempt and thinking about how fast things change in my line of work, this is a lesson in margin of safety, preparedness, and how bad stuff happens. For as long as humans are humans, risks will be taken, and there will be consequences.
More access to the great outdoors and investing is changing every day. What doesn’t change is human nature. There will always be speculators. There will always be risk takers who create danger, even for those who aren’t lost in the wilderness.
P.P.S. You have learned a lot from me about the dangers of heading up the mountain without a solid plan, and a refusal to turn around even when it’s obviously too dangerous to climb. The Lions of Winter isn’t just a warning to mountain climbers or backcountry skiers, it’s a warning to anyone attempting something dangerous without a backup plan.
A danger many Americans take on without giving so much as a thought to the risks involved is taking on mountains of debt. Credit card debt, student loans, auto loans, mortgages, financed furniture, second mortgages, and home equity loans, and the list goes on. People bury themselves deep in debt, sometimes with no real plan to escape. Take a look at my chart of American credit card balances below. The total is nearing $1 trillion after rocketing upward through the Covid recovery and high inflation of the Biden era.
Mortgages aren’t any better. Outstanding liabilities for one-to-four family residential mortgages have grown to $13.3 trillion, also a record high.
Now, debt can be outgrown. As the economy grows, debt tends to grow, but it shouldn’t be ignored either. Like a storm on the mountainside, you shouldn’t climb into it; you should find a way around it or head back to basecamp and try again when the weather is better.
Don’t climb a mountain of debt. Your Survival Guy likes you to be debt free when possible. Debt has its uses, but be sure you have an escape plan that makes sense. When you want to talk about your escape plan, email me at ejsmith@yoursurvivalguy.com. In the meantime, click here to subscribe to my free monthly Survive & Thrive letter.
P.P.P.S. If the Ukraine war has taught the world anything, it’s that the future of warfare, at least its near future, is drones. Americans got their first taste of drone warfare in the Global War on Terrorism when drones like the MQ-9 Reaper and the RQ-4 Globalhawk filled the skies. These drones were built like airplanes, fast with a long-range, but in need of landing strips.
Those types of drones have been used in the war in Ukraine as well, most famously those built by the Turkish company Baykar, which were used very successfully at the beginning of the war. But now, the Ukrainian and Russian armed forces are relying more heavily on smaller quadcopter-style drones for surveillance and attacks. These drones can take off from just about anywhere and land just about anywhere, but they’re not that fast compared to the larger airplane-style drones.
Now, Sikorsky, the famed helicopter company owned by Lockheed Martin, has attempted to build a drone that is the best of both worlds. The new uncrewed aerial system, known as a rotor blown wing, operates in both helicopter and airplane modes. It combines vertical takeoffs and landings, with the speed advantages of an airplane. Lockheed Martin reports:
STRATFORD, Conn, March 10, 2025 – Sikorsky, a Lockheed Martin company (NYSE: LMT) has successfully validated the advanced control laws to successfully fly a ‘rotor blown wing’ uncrewed aerial system (UAS) in both helicopter and airplane modes. Powered by batteries, the 115 pounds (52kg) twin prop-rotor prototype has demonstrated operational stability and maneuverability across all flight regimes, and the potential to scale the unique vertical take-off and landing (VTOL) design to larger sizes requiring hybrid-electric propulsion.
“Combining helicopter and airplane flight characteristics onto a flying wing reflects Sikorsky’s drive to innovate next-generation VTOL UAS aircraft that can fly faster and farther than traditional helicopters,” said Sikorsky Vice President and General Manager Rich Benton. “Our rotor blown wing platform is a prime example how we are leveraging the breadth of our 102-year aviation heritage to develop new designs that meet the emerging missions of commercial and military operators.”
Here’s how the system looks while flying in airplane mode.
Watch the UAS in action:
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