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This guy is going to regret his life in 15 years

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Sigh. An email I got recently.

Vito writes:

“Love your name btw. Just ram it! lol. My investment strategy is non complicated. I invest everything I have in gold and silver. 75% silver and 25% gold. Simple and effective and no need to read any books. It’s doing very well. Nobody I know has the slightest clue what’s going on. They think gold and silver is gambling or it’s too risky. LOL. Fucking illiterates. Nobody taught them shit. They trusted their politicians and bankers. They deserve what is coming. Nobody wants to hear about gold and silver. Little do they know when the dollar collapses they’re all going to get rammed up the ass and I’m going to be skating away smelling like a rose with all my money and more. I don’t bother with equities either. They’re a rip job. Investors today are fucking stupid. They react to all the talk in the media and forget about the fundamentals of gold and silver and actually sell it. That is where I enter the scene and buy, knowing full well it’s got one way to go but up, like the national debt of all western economies. Thank God for fucking stupid people!”

My response:

“probably not the best strategy for the long term.”

Vito writes:

“Gold and silver is not the best strategy for the long term? Why, if you don’t mind my asking?”

My response:

“It severely underperforms other investments over the long term. This is why you need to read a couple books on personal finance — at a minimum. What is performing really well today likely won’t perform well over the long term. I cover this in my book or there are many, many other books/free articles online.”

[We go back and forth a few times and I encourage him to read some books to dig up the data himself…]

He responds:

“Well Ramit, you can keep your data. How can a best selling financial author give out this sort of nonsense for advice? What do you think, I’m some sort of dummy? Check out the data on the debt in the US and Europe. Do you even know how high it is? And the banks, do you have any data on how much toxic debt they’re carrying in worthless OTC derivatives? Anybody that follows you blindly into equities I can unequivocally guarantee will be in for a religious experience and a world of hurt. Long term equities will destroy you.”

“You can keep your data.” Ok, I think I will.

I rarely blame people alone for their lack of financial knowledge, as there are many groups to blame — schools, companies, and Wall Street — but this guy is actively proud of not reading even one book.

As with most people, education alone is not the answer to change his behavior, as he will never allow himself to be subjected to education.

It’s interesting: People complain about their finances for nearly their entire lives — without ever reading one good personal finance book.

Yet when you collect the data, you find predictable patterns.

  • In their 30s, they wish they saved more to travel in their 20s.
  • In their 40s, they wish they’d saved more for a down payment in their 30s.
  • And in their 50s, they wish they’d saved for one simple thing in their 40s: retirement.

Each of these groups could have done so in a period of a few weeks — then let their system automatically work for them.

But it’s easier to make doomsday predictions about the world, concoct macro-economic theories, and call other people “fucking stupid.”

* * *

Interesting reading…

1) Read more rants about dumb people.

2) I’m working on something special right now. If you’re interested in saving money on your biggest expense, I’d like to ask you about it:

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  1. I’d like to take the survey but the link provided sends me to the ‘thank you for taking this survey’ page…

  2. Have to go with the other guy on this one Ramit.

    Your investment strategy advice is predicated on the assumption that the stock market will , on average, continue to perform as it has over the last 30 years. It clearly has not since 2008, and, clearly, will not in the immediate future. When he said keep your data, he meant that this historical data will NOT help you analyze whats GOING to happen given that we are in a season where the financial markets are not, and cannot behave like they have in the past. The past, in the situation we are in, definitely, tells you nothing about the future (and note that it did not tell you about the future even when the stock market was stable, it just seemed to).

    Read The Black Swan for an introduction to this theory. Taleb write abouts making decision around an investment strategy (even one centered on gold and silver) much more coherently than your email correspondent seems to have done.

    You definitely want to take some time to understand the thinking behind this approach if you have not.

    • The one thing I agree with is that the past is not a guarantee of the future. On the other hand, history tends to repeat itself. As The Black Swan author asserts, certain “improbable” events happen with regularly. Therefore, history is indeed a valid indicator of the future, as many black swan events have already happened and are represented by historic data.

      To take this one step further, while no two catastrophic events are the same, the players are always present: human beings, companies and governments. These parties tend to react predictably and irrationally, with governments with knee-jerk legislation, people reacting on greed and fear, and corporations for profit.

    • One quote I think is interesting:

      “Your investment strategy advice is predicated on the assumption that the stock market will , on average, continue to perform as it has over the last 30 years. It clearly has not since 2008, and, clearly, will not in the immediate future.”

      So, Ramit is assuming that the stock market will average what it has the past 30 years, based on 30+ years of data. You’re assuming the stock market will not perform like it has the past 30 years based on 3 years of data. Who is making the bigger assumption?

      Additionally, your use of “clearly”, twice in one sentence, to indicate overwhelming evidence in support of your point lacks any evidence whatsoever.

      Hoping to inject some perspective…

    • Worse. Advice. Ever.

      Please don’t call me for a loan in 30 years.

    • Yeah you said bestselling author that doesn’t mean s*** how about super successful investor. Your advice is pretty much worthless I’ll stick with thousands of years of a trend.

  3. I love how you can tell they have no idea what’s going on when they simply throw buzzwords and talking points out there. But I feel really badly for people like this, and I hope that this guy smartens up.

  4. Is gold/silver really the most _needed_ material that will be in limited supply in for instance 30-40 years? Are we even sure they will be demanded enough that gold/silver value will increase?

    Remenber, historical data is apparently of no use here…

    • Historical data is old garbage when I want to refute someone, but valid when it supports my decision!

    • Even if it does not increase, it cannot decrease!! Unlike paper money….just keep on printing .

  5. You probably got identical e-mails 5-6 years ago from people talking about how housing and real estate are no-brainers. And if you were blogging 12-13 years ago you’d hear how tech stocks were no-brainers. All of these bubbles are the most fun on the way up.

  6. This kind of personality is very difficult for me to take as well. You really can’t discuss anything much except the weather with this guy, because he will have the same ridgid attitude about everything from politics to the best way to swing a golf club. There is never any conversation with these guys because any kind of conversation or communication involves listening with an open mind an heart. This guy can’t do that.

  7. One glaring problem with the assumptions that Vito makes is

    “Little do they know when the dollar collapses they’re all going to get rammed up the ass and I’m going to be skating away smelling like a rose with all my money and more.”

    If the dollar collapses then what “money” is he planning skating away with?

    Historically, when an economic system collapses then society reverts to a bartering system of goods and services. Basic living necessities will far outweigh the need for precious metals.

    • Precisely. I always wonder about this when I hear people’s doomsday predictions for the collapse of the dollar. If the economy completely collapses, it seems like food, water and fuel will be far hotter commodities than gold and silver bars.

    • Only the dollar is collapsing, other currencies *might* do just fine without a dollar.

      Essentially, the point behind going to gold/silver is not investment, it is risk mitigation. You know you are going to be skinned when whatever currency you have disappears so you buy something (gold/silver) that you can use to buy the new currency that takes it’s place.

      Its also important to note that that there is an intermediate step between currencies collapsing and going to bartering which is using a “universally” standard currency – typically gold or silver. Since you actually own the metal (which means you bough actual silver/gold rather than an investment certificate that assigns a value, in some currency, to the silver/gold you *bought*, then you can actually melt it down and trade your silver/gold for other stuff.

      I am really happy though that we have now moved from the ad hominem attacks to actually discussing the ideas presented.

    • Seriously. If the dollar collapses, I have a feeling you won’t want to have invested in gold. You’ll want to have invested in canned food and ammunition.

    • Aside from hoarding precious metals, I’m sure he’s planning on relocating once inflation gets out of control.

      As a like-minded investor, I’m planning on hopefully converting my gold/silver to Canadian Dollars, Brazilian Reals, Swiss Francs, or maybe an Asian currency.

      With the recent boom in gold/silver, it’s pretty easy to turn bullion into currency. And if worst comes to worst, and we do end up bartering for goods and services, then gold/silver will be KING.

      The stock market is a fixed game. Long-term investing is dead. If you want to educated yourself, read books of value by economists such as Jim Rogers, Peter Schiff, Marc Faber, Nassim Taleb, etc.

      Jim Rogers is a perfect example of an economist who understands commodities. He made enough to travel the world for several years on a motorcycle. He has now relocated his family to Singapore and lives a very happy life abroad.

      I’m from Southern California and cannot stand the average person’s mentality. I love the weather, my friends, and family, and of course the convenience of life. I do not see myself living in the US for much longer.

  8. I’m sympathetic to the other guy as well. But I wouldn’t recommend putting ALL of your money in gold/silver. As Steve said, it’s a hedge and not an investment.

    Speaking of predictable patterns, almost all of the currencies the world has seen are now worthless, except precious metals.

    You can’t always rely on the past as an indicator. Diamonds have always been extremely valuable, but then something revolutionary happens (like the ability to manufacture diamonds) and suddenly their value is dictated by a different set of variables.

    Likewise, the dollar will be fine . . . until it crashes. The problem with the “other guy”‘s view is that we don’t know when the dollar crash. It may not be in our lifetimes. The problem with Ramit’s view is failing to recognize that revolutionary events can and do change the rules.

  9. Clearly Vito is making a mistake by not understanding the arguments of a wide range of financial advice. (also, Vito, if you read this, I would strongly recommend reading fofoa, ie and

    Sorry, but how can you compare ~100 years of dollar denominated stock market growth with 6000 years of gold’s storage of value ? And argue that the stock market is clearly better ? The long run value of any fiat is zero; this has been proven time and again. The only question is if we will see the dollar’s long run in our lifetime (my bet is yes, but unlike Vito I am hedging some wealth in paper assets in case I’m wrong).

    There are a number of powerful arguments that the next couple of decades will look little like the last decades (see for a mainstream example). The returns of paper financial instruments over the last 70 years are *no* guarantee that they will continue at said pace. I would not want to be holding much paper when, for example, the rest of the world decides the dollar reserve status is no longer in their benefit; or when the US government hits a 200% debt/gdp ratio, probably both of which will happen in my lifetime.

    ~Mike h

  10. So I think that guy might have a point. He’s investing in things, has a system, and taking action. That’s a lot better than most people who are paralyzed. When he loses his shirt then he’ll have some real experience instead of just data, and he’ll know better next time. I agree with you Ramit, study and understand, but far more important to act even if you lose a bit of money or time. I did a case study on myself because my friend pissed me off by asking me for stock tips when he actually already knew everything I did but DIDN’T ACT. Action is better than knowing. Knowing + Action is best — I think this is generally your message too, if not in those exact words.

    My post is All-In: How I Made $800,000 in a Lifetime and $15,000 Last Week

    • Alex- I would even argue that one doesn’t have knowledge without accomplishments. Until they do have accomplishments, they just have information. The ability to take information and act with it produces proof of knowledge, or accomplishments. I wrote an article sharing an experience with my 3 year old about this topic: