GUALFIN, ARGENTINA – We rode out to one of the high valleys on Sunday.

Leading the way were the ranch foreman, Gustavo, and his son, Agostín.

Agostín is 10 years old. But he is already a gaucho – sure of himself on a horse… unafraid of the cows… ready to work from sunup to sundown, as long as he can be outside.

We passed ruined stone houses and terraces where Indians once planted corn and potatoes; some may have been abandoned a thousand years ago.

“Not this one,” said Gustavo, pointing up the hill.

“My grandfather lived here as a boy. They had a small alfalfa pasture in front. There was more rain back then.”

It took about three hours – up the riverbed and over a low mountain to a small pasture surrounded by mountains. The previous owners had built a tiny stone house on the side of the pasture… and a stone corral about the size of a quarter of a football field.

Nearby was a small crowd…

Bareback Riders

Gustavo’s extended family – grandparents and children along with brothers, sisters, cousins, and wives – had gathered for the annual roundup of the semi-wild cattle living in the area. They were preparing their camp.

As we approached, two boys – about 12 or 13 years old – galloped up on horses, riding bareback. The two came to us, introduced themselves, and shook our hands.

In the camp, set amid ruins of what must have been a house, meat was roasting on a fire. Bales of blankets were piled near the corral. Bags and boxes of food sat on top of low stone walls.

We recognized most of the faces. The originarios – the locals claiming indigenous rights to our land – no longer even tip their hats. But this was a friendly crowd.

The men put out their hands. The women and children turned up their left cheeks for a kiss. There was Gustavo’s mother, Marta. There were several of his half-brothers and cousins.

There was also Vasili from one of the originario families. He hooked up with one of the gauchos’ daughters and came to work for the ranch; his family ostracized him.

José and his wife, Silvia – who is nearly deaf – were also there.

“Don Bill asks how you are,” a sister shouted in her ear after we greeted her.

Head of the Clan

And there was old Don Domingo, head of the clan, sitting on a boulder near the small house.

Hunched over with age, we wondered how he got there. Some walked. Some rode horses. We were surprised he could do either.

Don Domingo took our hands warmly.

“I’m so glad you came, patrón.”

For the next three days, young and old will sleep out in the open. They will eat around a campfire. They’ll get up at 4 a.m., fan out into the mountains, and chase the unruly cows until nightfall.

“I don’t see any cows at all,” we remarked to Gustavo.

“They’re there. They’re behind the rocks and in the ravines. But it’s a lot of work to find them.”

There are said to be about 300 cows – scattered over about 5,000 acres of rough country. They must all be driven into the corral, where they will be vaccinated, branded, castrated, and tagged.

A few of the young males will be herded down to the corral in front of our house; they will be the “rent” payment for the year. The rest will be released back into the hills, where they are on their own for the next 12 months.

Indigenous Roots

We bought the ranch 10 years ago. There were no claims, disputes, or set-asides regarding the title.

Then a political movement began.

Activists arrived from the city and told the locals the land could be theirs. All they had to do was rediscover their indigenous roots.

Now, a group of them claims to have revived the “Diaguita community” – a reference to a group of pre-Inca natives. The ranch should be theirs, they say.

There are no property or historical records to support their claim. The Inca conquered the area at least 100 years before the Spanish arrived. The Diaguita language disappeared. The people were dispersed.

No “tribe” remains. And it is not clear whether any of the people living here are descendants of the Diaguita.

The fellow who calls himself the “chief,” for example, lives in a town two hours away. He is the son of a German woman. His father – a local – refused to recognize him. He says he has no connection to the Diaguita.

Planning an Ambush

Genuine or not… the originarios are planning an ambush.

Last week, we got a summons.

We are to report to a local administrative building for a mandatory “mediation” with the originarios.

The proximate cause of this dispute: We put in a water line in one of our pastures. The plastic pipe runs almost two miles from a small spring to a watering trough so that the animals don’t have to walk across the valley to get a drink.

The hitch: The originarios are claiming the field belongs to them.

“I’m glad we got the summons,” we told our lawyer.

“I’d like a chance to set the record straight. The people here who are claiming the ranch are not even from here. They came from the Puña [the high desert that stretches from the mountains in back of our house to Chile].

“If they can claim title, so can anybody. So why should they get it? We don’t care if they are originarios or not. We’ll respect their rights. But they’ve got to respect ours.”

“Yes… and you think they care what you say?” our lawyer replied.

“You’re walking into a trap. You’re a foreigner. A rich foreigner. You barely speak Spanish… and you don’t understand the local dialect. Sometimes, even I can’t understand you. You’ll lose.

“Besides, they know perfectly well where they came from. They know they don’t have a leg to stand on, legally.

“But this is a political issue. There are about 125 potential originarios living on the ranch. Luckily, most of them are still with us. But there’s just one you. And you don’t vote here.”

Originario Shtick

The valley is full of decent people.

All share more or less the same culture and DNA. Nobody knows, more than a couple generations back, where they came from. They have Spanish names; you can see that many have very little Spanish blood.

Most of them respect each other’s rights, live cooperatively, and do win-win deals with one another.

Here at the ranch, most are friendly and helpful. Our gauchos walk as much as two hours a day to get back and forth to their jobs. They work hard with little oversight.

Others are self-sufficient. They plant corn and potatoes on their little plots. They weave sweaters and braid lassos.

Then, once a year, they round up their herds in the mountains and make their token rent payments – one rangy cow for every 20 adult animals in the herd.

But a few have seized this originario shtick, which, they believe, gives them the power to take almost any property they want. No need to be friendly or cooperative; they should get what they want by right of birth.

No need to mark their cattle, they say. All the cattle should be theirs.

They even have a list of all the ranches and farms they believe should be theirs. It covers almost the entire valley… our ranch included.

So now what?

Trust recedes. Win-win deals decline. Learning slows. We are reluctant to invest more in the ranch. And we hesitate to rent land to local people for fear they may announce they are originarios and claim title over it.

We pay a lawyer to represent us. We spend time responding to originario attacks, bringing in the police and suing the ringleaders.

Now, almost every large property in the valley is for sale. But there are no buyers. No investors. Who would want to take on so much trouble… and so much risk?

Progress here has slowed down.

In one of the poorest parts of South America, people are getting poorer.




P.S. Next week… we’ll look at a place where they’re getting even poorer faster: Venezuela.


Market Insight: Embrace the Correction

By Chris Mayer, chief investment strategist, Bonner & Partners

Editor’s Note: In the wake of the Dow tumbling more than 370 points on Wednesday, Bonner & Partners’ chief investment strategist Chris Mayer explains why you shouldn’t fear corrections… you should embrace them.


Market corrections are like dental work, you dread it. You don’t want to get it, but you’re glad when it’s over and you feel better.

– Michael Farr, money manager

bill bonner

Tip of the cap to my friends at Boyar Value Group for the Farr quote. It’s in their first-quarter letter, which includes some timely advice on handling market corrections.

Mark Boyar established Boyar Value Group in 1975. He is a wise investor for whom I have a great deal of respect. I keep telling him he should write a book. He’s got a head full of great investing stories that would make it an instant classic.

Until he does, we have his letters, which he writes with his son Jonathan.

In their latest, they admit they’ve trailed the major indices year-to-date because they’ve held a lot of cash. But short-term underperformance often seeds long-term outperformance.

They point to their experience in the run-up to the 2007–’08 financial crisis, when they also carried a lot of cash. This allowed them to take advantage of the tremendous bargains when the market broke.

“In 2007 and 2008, for example, CBS sold for under $10 per share and Saks Fifth Avenue for less than $2 – and both went on to increase in value more than fivefold,” they write. “If we are fully invested during these periods, we can’t take advantage of such opportunities.”

Market corrections, then, are a boon to the patient investor. That’s when you really make a lot of money. But it requires patience. It’s often too hard for most investors to bear a seeming lack of progress. They want their stocks to go up now. And stay up. They’re like the kids in the famous marshmallow experiment who can’t wait five minutes to get two marshmallows.

The Boyars write about a couple of memorable examples of the value of patience:

In his book Water the Bamboo, Greg Bell used giant timber bamboo as a metaphor for success: even with regular watering, it makes no visible gains for its first three years of life – but then, suddenly, it sprouts 90 feet in two months. Bell’s college roommate, Mark Few, made 19 consecutive NCAA appearances with the Gonzaga Bulldogs before taking the team on its first trip to the finals. Patience is one of the most important elements of successful investing.

With the market suffering its worst day since Trump’s election, it’s a good time to remind you of these things. We haven’t had a 10% pullback in the market since February 2016:

Though infrequent, these are good times to put cash to work by buying quality companies when they go on sale. My lead analyst, Thompson Clark, and I were delighted with the market’s drop on Wednesday. “We need five more days like that,” I told him.

We get happy when prices fall because we know it’s during times like these we’ll get great prices on businesses we want to own. This is the mindset of all great investors. It’s crucial to long-term success.

There is no guarantee, of course, that every correction results in a new high a short time later. There is always the chance of a longer, more drawn-out decline, such as when the market halved from 2007–’09. Even then, patience paid off as the market more than tripled off the March 2009 lows.

Take it from a wise investor who’s seen many market cycles. As Boyar writes: “Remember the most important thing to do during a correction is not to panic (using your cash hoard to take advantage of bargain prices comes a close second).”

Chris Mayer

P.S. Next Thursday, I’m hosting an online investing seminar with readers like you. I’ll show you my method for identifying great stocks before they take off. I’ll also give you six stock recommendations from my current watch list that I’ve never shared publicly before. Be sure to reserve your spot right here.

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Bill’s Thursday Diary, “How the Elites Betrayed Working-Class America,” has gotten some readers thinking…

I suggest a revisit of Econ 101. Labor wants more money so it goes where it can get it. Capital wants higher rents so it moves to where it gets higher rents. Etc.

After WWII the USA had the only functioning economy, so we sold everything to everybody. Management believed they were geniuses and wanted higher pay, which they got. Workers also had more money, which led to our consumer economy expansion.

Then the rest of the world caught up – we started importing cheaper goods and laid off some labor. The middle class now earns a lot less in real dollars and has a ton of debt. This is finally leading to a dramatic pullback on spending (retail is in the mud) and a rising default level for consumer loans.

Way back when, we had the highest standard of living in the world. But now the developed world has caught up not by increasing their standard to our previous level but by a combo of them moving up and us moving down.

– Donald A.

You list three conditions required to have a win-win deal, but you leave out one critical condition. To make a deal, a person must have something someone else wants. This can be labor, capital, expertise, or influence. Many people these days have none of these.

Without welfare, which you reject as not being a win-win deal, they would starve. Even obtaining a skill requires some money. The US system is designed to create win-lose deals for people who have nothing of value or do not have the money to gain something of value, such as a skill.

– Edmund S.

Meanwhile, one reader wrote in with a personal note for Bill…

Thank you guys for your kind offers to get me into making money. I guess I’m just a fence sitter. I find yours and Doug [Casey’s] writings and information very interesting reading. I just happen to be happy with the wealth I already have, lovely wife and happy family, a freehold farm near a small rural town and several American pickup trucks. I love the states and [am] sad to see its destruction looming ahead.

– Jeff P.

Editor’s Note: Thanks for writing in, Jeff. No matter if you take us up on our research services or not, the most important thing to Bill and his team is that our readers are enjoying the Diary.