FLIPFLOP LOUNGE HOSTEL, CHENGDU – Yesterday, Gabriel, a backpacker from Ireland, asked me what I thought of bitcoin…

“It’s not a popular view,” I warned him. “But I’ve been following bitcoin since 2012. So I have some history with it. I love the concept, but in my experience, when something goes through a speculative bubble like bitcoin did in 2017, it needs a long cooling-off period before it’ll rise again.”

“How long?”

“Until everyone’s lost interest.”

“Oh.”

On the Road

I write you today from the common area of our hostel. Kate (my ex-wife) and the kids are sitting next to me.

Penny (7) is drawing a picture. Dusty (11) is doing his math homework. And Miles (9) is listening to an audiobook. Nearby, a couple of backpackers have just struck up a conversation.

I have a cup of Nescafé in front of me. And a pencil in my hand. Jazz music is playing…

Later, we’ll probably socialize with some of the other backpackers… maybe play a game of pool…

Waiting in Gold

There was a speculative mania in the stock market in 1998 and 1999, driven by internet and technology stocks. It broke in March 2000, and 19 years later, stocks are still going through the “cooling-off” process.

As I told Gabriel with bitcoin yesterday, stocks won’t be a good investment again until everyone’s lost interest in them.

“But the stock market made all-time highs this year,” you might say.

No, it didn’t. Not when you look at it from the perspective of gold, which is the correct perspective to use if you really want to know how well something’s doing.

From the perspective of gold, the Dow Jones index is down 57% since the mania broke in 2000.

Here’s what the Dow looks like when priced in gold… going back 120 years…

Chart

It’s still going lower. In the last 12 months, the Dow is down 22% in gold terms. It’s down about 14% in gold terms in the last four months.

By the time everyone’s “lost interest” in stocks, the Dow should be down about 90% from its 1999 high in gold terms, or at a Dow-to-Gold ratio below 5.

(It’s at 17.5 this morning.)

This is why I won’t buy stocks today. I’m waiting for them to reach the point of “investor indifference.” In the meantime, we wait on the sidelines in gold.

– Tom Dyson

P.S. There’s another – very personal – reason why I won’t buy bitcoin. I like to make huge all-or-nothing bets on things I have absolute and total conviction in.

I had absolute conviction in bitcoin at $4 in 2012. But with bitcoin above $8,000 and everyone still talking about it, I don’t have the conviction levels I need to make a big investment. I’d be terrified I was buying at the top, and I’d probably panic-sell my stake at the first sign of weakness.

On the other hand, I have so much conviction in my Dow-to-Gold bet, I’ve put every spare cent I could find into it. And I won’t flinch until the Dow-to-Gold ratio hits 5, no matter how scary the ups and downs are.

P.P.S. Here’s my son Dusty putting on an exhibition for the locals today…

Chart

FROM THE MAILBAG

Reader question: Love your stories. Look forward to reading about your travels every day with awe and admiration. It is nice to see you had a single-minded purpose in which you believed and are following through with single-minded determination. It would be nice to know how you decide which city you go to and how long you stay in each city. Wish you the best in your recovery, and safe travels to you, Kate, and family.

Tom’s response: Thank you for your kind note. We try to avoid megacities and capital cities, although sometimes we can’t avoid them. One strategy we’ve used successfully is looking up the third-largest city in a country and going there. They’re much less hectic and less expensive, and you get a better idea of what life is like for the locals. We’ve found staying places for three nights is a good pace for us.

Reader comment: I have an extensive background, as an executive, in high-rise office development and other large real estate developments in the U.S. I can appreciate much of what was relayed in the postcard. A couple of years ago, I had the opportunity to visit Beijing and Hangzhou in China on business. I was absolutely flabbergasted with the amount of construction and the large high-rise residential buildings. Was totally mind-boggling. It’s interesting to hear what is happening outside the major metropolitan areas. Enjoyed the postcard.

Reader question: How did you select the Qiaotou canyon as a destination? How did you manage to purchase bus tickets to this destination? Did you hold up a map and point at it?

Tom’s response: It’s the must-see attraction in Yunnan Province. But I’d never heard of it until we got to Kunming, the capital of Yunnan Province. Think I learned about it from TripAdvisor. Except for plane flights, we don’t plan our journey more than a day or two in advance. We go wherever the wind blows us. This has worked really well for us.

I bought the bus tickets by saying “Qiaotou” to the clerk, and then calling Kate and the kids over so she could count us. Luckily, she understood my pronunciation. Then, I pointed to the date we wanted on my phone. She showed me the bus timetable on her screen. I picked the 09:30 bus.

Reader question: It looks like your family is thriving. But what would you do in a medical emergency while in a remote village? What currency do you carry to exchange to the local currency? Traveler’s checks?

Tom’s response: We had a medical emergency when we were in Udaipur, India. Penny fell off the top bunk, landed on her head, vomited, and couldn’t see. We rushed her to the hospital. Luckily, everything turned out fine, and she recovered her vision a few hours later. But Kate and I experienced a level of panic and fear I hope we never have to go through again. We thought she had a brain injury. I was mentally preparing to rent a helicopter to fly her to specialist pediatric brain doctors in Delhi. It was awful…

We don’t carry money or traveler’s checks. We either pay by credit card or draw local currency from ATMs. We’ve been across four continents, and so far we haven’t had any issues doing it this way.

Reader comment: Well, Tom, you finally said the one thing I most wanted to hear: You’re getting remarried to your ex-wife and re-glueing your family back together. Awesome! Terrific!! I’m so happy for all of you!!! All the best to you all, and be safe on your continued adventures.

Tom’s response: Thank you for the kind words. And I agree with your sentiment. Compared to Kate and I getting back together, none of the rest of this really matters.

Reader comment: I don’t know where you got my email address from, but damn am I glad you did. What a great first story… Fantastic! Also, really glad to hear that you and your wife will be staying together. AWESOME! I hope to see posts from you two on a regular basis. I may have missed the mention, but do you have any type of Patreon account where people like me could actually contribute a few bucks to help fund your adventures?

Tom’s response: Hahahaha, sorry for spamming you with my emails. And thank you for such a kind and encouraging message! I read it to Kate (as I do with all the feedback we get), and she was touched, too.

Also, what an extremely generous and sweet offer to contribute a few bucks. We couldn’t possibly accept, but we’re honored all the same.

Reader comment: I enjoyed your posting. The lifestyle you have chosen for you and your family is interesting. I agree with your decision about your children’s education. Unfortunately, America lost our quality-education battle many years ago. (My four sons were probably part of the last of the generation that was able to get a good quality education. They are all in their 50s now.) Your children are among the few who will not be indoctrinated by the socialists that control our educational system today. I fear we lost that battle. Fortunately, there are some parents that have made the decision to pursue alternative educational programs that are available today thanks to the internet. Best wishes to you and your family. I would love to follow your life learning adventures as you continue through this process.

Tom’s note: Your messages are an integral part of this project. (I’ll never reveal your identity if I decide to republish your note.) Keep sending me your questions and comments at [email protected] And you can always shoot our customer service team a note here, too.