Masters Series: 'I Now Know What It Looks Like When Hope Is Gone'

Editor's note: In the nearly 12 years that he's been writing True Wealth, Dr. Steve Sjuggerud has made a habit of finding investments where the upside potential is tremendous… and the downside – if he's wrong – is negligible. Over the years, he's shown his readers dozens of low-risk ways to make great money in stocks, bonds, and real estate.

Investing in a sector when there's "blood in the streets" is one of Steve's core contrarian principles. In today's weekend Masters Series essay – originally published in the August issue of True Wealth – Steve shares an early personal experience with "blood in the streets" investing.

He says in his experience, you can make hundreds-of-percent gains from these types of opportunities…
 

'I Now Know What It Looks Like When Hope Is Gone'
By Steve Sjuggerud, editor, True Wealth

I got in the taxi, and the driver locked the doors...

"Uh oh... I'm in trouble," I thought.

The whole thing felt wrong from the start...

Before I landed, I was told to make sure to get a "BlueBird" taxi... I didn't know why at the time. But apparently, taxi drivers had robbed and kidnapped (and worse) many foreigners coming in from the airport.

It started with a seemingly helpful taxi guy grabbing my luggage at the airport. "Are you BlueBird taxi?" I asked.

"Yes, BlueBird," he replied quickly, as he slammed the trunk on my bag. He quickly opened his taxi door, and I got in. We sped off. And then the door locks clicked. That's when I realized this was no BlueBird.

I'd just landed, alone, in Jakarta, Indonesia.

The road from the airport to the city was an hour of, well, not much. I realized this guy could stop anywhere and rob me (or worse), and leave me stranded. Nobody would know. And there wasn't much I could do about it.

This was 1998, in the heart of the Asian Crisis. And Indonesia was facing the worst of it.

As an investor, you make the most money if you have the courage to go in when there's "blood in the streets." So that's what I was doing... I just didn't think it might be my blood in the streets.

Indonesia was a financial disaster at the time. The stock market had fallen 93% in U.S. dollar terms in 14 months. Sometimes, financial crises are limited to stock-market investors – like the dot-com bubble in the U.S. But that wasn't the case in Indonesia. It affected everyone.

My non-BlueBird taxi driver actually did take me to my hotel... He might have sized me up as a potential target... But I was a 6'4" American in my late twenties travelling with only a duffel bag. He probably figured that overcharging me for cab fare was the easiest way to take more money from me.

I'd never been to Jakarta before, so I signed up for a tourist bus trip around the city the day I arrived. The big tour bus pulled up, but I was the only passenger. That's how bad things really were in Jakarta.

As we drove, it was clear the city was in chaos. Young Indonesians with guns and other weapons were on the tops of moving buses, headed to protests in the city. It was surreal.

I got back to my hotel room and had a message from the investor that was going to show me around Jakarta: "Do not leave your hotel room. Dinner is off. All meetings are off."

I looked out my window and saw angry Indonesians protesting. Many had serious weapons. Their numbers grew. I holed up in my room, not really knowing what to do.

Things were calmer the next day, and I did get a couple meetings in before heading to the airport (in a real BlueBird this time). The faces in the meetings were as somber as I'd ever seen.

I met with the head of Indonesia's central bank – the country's equivalent of Federal Reserve Chairman Ben Bernanke – to see what his plans were to fix the economy and the currency. Instead of telling me what he was doing, he asked me, "Well, Steve, do you have any ideas for us?" His desperation was obvious.

I now know what it looks like when hope is completely gone.

The thing is, when things can't get any worse, they generally don't. They simply get less bad... And that is the exact moment you want to be buying as an investor. That is when great bull markets in stocks are born...

The old "buy when there's blood in the streets" saying turned out to be true for Indonesia... Starting in September 1998, Indonesia's stock market soared 505% in less than a year in U.S. dollar terms.

I tell you this story to show you what "blood in the streets" looks like from an investor's perspective.

Good investing,

Steve Sjuggerud

Editor's note: Steve shared this story with his True Wealth subscribers recently because right now he's seeing another opportunity to invest at "blood in the streets" prices – without actual blood in the streets. The investment is cheap enough to make huge, triple-digit returns (like we saw in Indonesia). To find out more about this opportunity, you can sign up for True Wealth by clicking here.