postcards from the florida republic: An independent and profitable state of mind.
“Rosalia” was a famous Naples, Florida entrepreneur.
In 2021, in the wake of COVID, when cash was flush, and equity valuations didn’t matter, Rosalia took out ads in our local Spanish-language newspapers and radio stations. Handwritten flyers popped up at laundromats.
You couldn’t miss them.
She offered “spiritual/witchcraft services” to address problems up to and including spousal disagreements. The ads featured a “100% guarantee” that promised results.
She told one client that he had something “dark in his life” as she flipped over fateful Tarot cards. She ordered him to sleep with three eggs under his bed and then bring the eggs back to her.
When she opened the eggs, one was filled with blood, the other with needles, and the third with worms.
There was “still darkness,” she said.
To cure that darkness, she told him to gather every dollar he had, borrow from friends, and ask relatives for cash. In all, she promised to take the $29,500 he’d ultimately gather to her temple.
There, she would bless the money and “multiply it.” She agreed to meet him the next day with a bounty of money.
But the next day, she canceled their appointment. She stopped answering messages. She was never seen again.
In total, she gathered $100,000 from ten people. Kudos to them for having the guts to admit this story to national media; not one of them thought she’d take the money and run.
Now, some would argue that Rosalia was just a common crook, a con artist.
But look northward from Florida, and compare Rosalia to the people running Congress.
It seems her little swindle is just a drop in the bucket…
Where the Real Money Is Made
You’ve gotta hand it to the politicians: When it comes to making money, no one seems to do it better than our so-called “public servants.”
Just ask former House Speaker Nancy Pelosi.
This year alone, Pelosi has made $12.5 million on Microsoft (MSFT) stock. At the end of 2021, it was estimated she and her husband were worth at least $140 million, largely thanks to well-timed bets on the market.
Nice work if you can get it.
In 2021, the press confronted Pelosi on her unparalleled investing success and asked whether Congress should be banned from owning and actively trading equities.
Her answer: “We are a free market economy. They should be able to participate in that.”
Not one journalist challenged Pelosi’s assertion. They just… let it go.
Free market, huh?
Well, let’s go back to the 2008 financial crisis.
Think back to a time when banks were hated. (I know, I know - things don’t change at all in America, do they?)
In March 2008, Visa(V) was planning its $18 billion initial public offering (IPO).
But Congress was considering a bill to eliminate “swipe fees” on credit cards – a very lucrative part of Visa’s business model.
Visa’s CEO got a one-on-one meeting with Pelosi. All the while, the company made some hefty donations to her campaign.
The company soon offered her husband, Paul, a money manager, an opportunity to take part in the IPO.
He bought 5,000 shares at an initial price of $44. Within a few days of being public, shares traded at $64.
He bought even more. That worked out.
That’s not the worst from the 2008 financial crisis. Maxine Waters – who somehow today is the head of the House Banking Committee “allegedly” pushed about $12 million to her husband’s failing bank. She had owned about $350,000 in OneUnited Bank at the time.
Ain’t the free market great?
Pelosi is an easy, (in)famous example of this “style” of investing. But they all do it.
And it’s done on both sides of the aisle.
Take Sen. Thom Tillis, a Republican from North Carolina. He just blew through the deadline to disclose stock sales in compliance with the largely toothless “Stop Trading on Congressional Knowledge Act,” passed in 2012. Easier for him to pay the fine, I guess.
There’s another bill making the rounds which would ban outright Congressional members from buying and trading stocks.
But that bill has about as much chance of passing as I do playing for the Baltimore Orioles in the World Series this year.
What’s the Wealth Secret
Even if a bill passes, most people (including Pelosi) have the entire thing all wrong.
It’s not a free market to begin with.
That’s largely since the Fed has a monopoly on money in America.
I’ve also heard some people argue that Pelosi and Congress, who seem to outperform even the greatest hedge fund managers of our time, profit on the back of fiscal policy.
There was ample speculation that the Pelosis were poised to make a fortune on U.S. semiconductor stocks ahead of a massive subsidization program launched in this Congress.
But I assure you, this is much bigger than Congressional bills.
There’s a very important force Beltway insiders understand that you likely don’t. And I’ll discuss it on Sunday.
If you simply track this one single factor – I assure you that you’ll be a lot more confident as an investor – and likely able to replicate the success of our political class.
Stay tuned and stay alert.
Garrett Baldwin
Florida Republic Capital
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.