2 Important Investing Lessons From The Robber Barons

Carnegie. Vanderbilt. Rockefeller. These names are synonymous with wealth and power.

Indeed, the so-called “robber barons” of the 19th and 20th centuries had this in spades. But merely fixating on how rich and powerful these men were is missing the point.

Personally, I find the term “robber barons” itself to be rather simplistic. It smacks of class warfare and diminishes their accomplishments.

Andrew Carnegie’s portrait in the National Portrait Gallery

Someone may think: “Nevermind that Andrew Carnegie gave away more than 90% of his fortune before he died. Think of the inequality! The ruthlessness!”

Such is history. We don’t have to deify history’s great men. But as investors, it’s important to learn how they achieved their success.

Now, I could give you a history lesson. I could tell you about Carnegie’s steel empire, Vanderbilt’s railroad conglomerate, and Rockefeller’s oil monopoly… But you can get that in a number of different places. There are plenty of fascinating books and programs that can tell you these stories far better.

The reason I bring the robber barons up today is to remind you of two important lessons. Consider this food for thought as you consider how to approach the market in the weeks (and years) to come…

Lesson number one: these men were opportunistic and resilient.

Say what you want, but these men made bold moves in the face of mountainous challenges. They dared to take risks when others shied away. If they failed, they dusted themselves off and moved on to bigger and better opportunities.

The markets are a tumultuous place. A single investment — or the entire market — could fall out of bed at any given moment. But once the dust settles that’s where some of the greatest opportunities arise.

Understand that I’m not calling for a market collapse in the near future. But a fickle market can keep investors awake at night.

We’ve received several questions from subscribers about how we plan to cope with any sort of market correction. (If you’ve heard this before, feel free to skip ahead. But since so many of you have asked, we feel it’s important to keep pounding the table on this…)

Don’t be afraid of a market correction. When it happens, have a plan to get out with minimal damage. On the flip side, be ready to strike when the time is right.

This means you need to be willing to accept a loss on a trade once in a while. This may not sit well with some of you. But in my opinion, any investor needs to be willing to accept a certain degree of risk. If you’re not prepared to accept, say, a 20% loss once in a while, then you shouldn’t be investing. After all, we can’t expect each trade to be a big winner.

Regardless of whether a correction happens this year or next, be ready to act quickly. Or, as Warren Buffett likes to say, be ready to go hunting for big game. Buffett understands this, the robber barons understood it — and hopefully, when the time is right, you will, too.

(See Also: 6 Questions About Value Investing, Answered)

Lesson number two: the robber barons invested in what we like to call “Irreplaceable Assets.”

If you’re a subscriber to Top Stock Advisor, you’re probably familiar with Irreplaceable Assets. You also know the critical role they play for businesses, consumers, and the overall economy.

Cornelius Vanderbilt

For a quick refresher, Irreplaceable Assets give businesses a huge competitive edge over the competition. We’re talking about things like railroads, ports, pipelines, hydroelectric dams, and many other vital pieces of infrastructure. In other words, assets that are extremely difficult to replicate.

These are some of the most dependable wealth creators on the planet.

Take, for example, Cornelius Vanderbilt. When he took control of the New York and Harlem railroad in 1863, many thought the company to be worthless. But it possessed a distinct advantage — it was the only steam railroad with access to the center of Manhattan. Even back then, it’s easy to see how “irreplaceable” this asset was. Moves like this allowed Vanderbilt to build a railroad empire — and amass a $100 million fortune.

There are countless other examples we could cite from the robber barons, but you get the idea. And these are exactly the kinds of assets you want to own now – and also when the market inevitably turns on its head.

When it does, you’ll be excited – because it means you have the chance to buy more of something that’s indispensable for much cheaper than you did before.

Closing Thoughts

Remember that the historical long-term average return of the stock market is about 7%, after inflation. What we’ve experienced during the past decade or so is nothing short of an incredible bull run. One of the best in history. Don’t expect it to continue forever.

Now, I’m not saying the market won’t post a gain this year. It’s certainly possible. But if history is any guide, investors should expect returns more in line with the market’s long-term averages going forward. The market has been very good to us over the last few years, and a reversion to the mean is more than likely.

(Related: Why Keeping Your Expectations In Check Is So Important)

That said, investors should take some lessons from the robber barons to heart. And while there’s certainly more to say on the subject, I think the takeaway is this… These men had a clear-eyed, dispassionate — even ruthless approach to business and markets. They dared to be uncommon in a time when America rewarded bold moves with untold wealth. And while much has changed over the years, we would be well-served to do the same.

In fact, my colleagues have just told me about a huge opportunity I think the robber barons would love…

In short, it has to do with “the most useful metal on earth“…

According to their research, the world is running on a 10-day supply. That’s it. Most people have NO clue this situation exists right now, but it’s getting serious… And like the robber barons, you know that when the supply of something we need is shrinking… and demand is exploding… that means prices are going to soar very soon. You can get a full briefing right here.