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March
12
2025
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How To Save, Invest, and Speculate When the Money Is Broken
There was no need for a dentist, construction worker, or small business owner to double as a hedge fund manager, attempting to predict market movements just to preserve what they had already earned. Today, the fate of many people’s savings hinges on Japanese monetary policy, the possibility of another financial crisis in Greece, turmoil in the Middle East, or the stock market throwing a tantrum over a comment from the Chairman of the Federal Reserve—or countless other ever-changing macroeconomic factors. Frankly, it’s absurd—made even more so because most people mindlessly accept this situation as “normal.” The truth is, traditional savings strategies are broken. If you want to preserve and grow your wealth, you need a different approach. Saving in a Broken System Saving is producing more than you consume and setting aside the difference. The most important question, of course, is, “Into what?” I’ll get to that in a moment. The key to building your savings is living below your means—not above them. How can you grow your savings?
The primary role of savings is to act as the most reliable source of purchasing power for the future. It’s not about generating a yield or making a 10x return. The sole purpose of savings is to preserve your purchasing power over time. That’s it. It’s not flashy or exciting, but it’s essential to financial security. In the past, government-issued currency was a viable option for savers because it was backed by gold. That changed in 1971. Since then, we’ve lived under a fiat currency regime, where governments can create unlimited amounts of money. It’s no surprise that governments favor currency debasement over politically unpopular tax hikes to fund their spending. Independent analysts estimate that, in recent years, the US dollar has been losing around 10% of its purchasing power annually. At that rate, half of its value evaporates every seven years. How will you save for the future—or retirement—when the US dollar loses half of its value every seven years? That’s a big problem everyone will have to address soon. Today, everyone has to earn their money twice—once when they initially earn it and again just to maintain their purchasing power. It’s an enormous challenge. Most people understand that holding fiat currency, which central banks continually debase, is not optimal. As a result, they turn to bonds, stocks, and real estate to try and preserve their purchasing power. But many confuse investing with saving. Investment Many people treat the classic 60/40 portfolio (stocks and bonds) as a savings account. But it’s not savings—it’s investing. Moreover, with currency debasement far outpacing nominal interest rates, the 60/40 portfolio is a poor option for investing. Investing is allocating capital to a productive business to generate more wealth. Unlike saving, investing carries risk—but also the potential for reward. A simple way to determine what belongs in the Investment category is by considering whether Warren Buffett might invest in them. Buffett’s philosophy—rooted in fundamental analysis—focuses on companies with:
Buffett once wrote (emphasis ours): “When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.” He was highlighting the importance of investing in great businesses and holding them for the long run, rather than frequently trading stocks based on short-term market movements. His philosophy is rooted in the belief that long-term ownership of high-quality companies leads to superior returns, especially when those businesses possess durable competitive advantages—what he refers to as an “economic moat.” Buffett’s approach perfectly exemplifies the type of stocks that fit within the Investment category. The biggest challenge with investing today is that rampant money printing by central banks has distorted financial markets like never before, rendering traditional fundamental analysis far less effective. It’s like using a measuring stick where the length of a centimeter keeps changing. As a result, finding high-quality businesses at reasonable valuations is becoming increasingly difficult. This distortion forces many into speculation. Speculation The line between investing and speculation isn’t always clear, but there are key differences. If a stock can be evaluated using fundamental analysis—such as profitability, revenue, or comparables—it likely belongs in the investment category. If it cannot be analyzed this way due to a lack of earnings, thin trading volume, or other factors, it probably falls into the speculation category. In essence, a speculator is someone who identifies market distortions and positions themselves to profit from them. They don’t create the waves in the ocean—they learn to surf them. In an era where fiat currency has undermined traditional saving and investing, learning how to speculate wisely has become more important than ever. The Game Is Rigged—Are You Prepared?Imagine working 9 to 5 for 50 years, only for the Federal Reserve to print 40% of the money supply and inflate away 20 years of your savings. You don’t have to imagine—it actually happened during the COVID mass psychosis, as governments worldwide indulged in a frenzy of currency debasement. I have no doubt that something like this—or much worse—will happen again soon. Let’s be honest—the system is broken. The dollar keeps losing value, and traditional savings methods no longer work. So what can you do? I just put together a must-read report detailing the three smartest ways to protect and grow your wealth despite the chaos ahead.
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There was a time when people could simply save the excess of their production over consumption in sound money—gold or a derivative of it—and focus on their families and passions.