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#876 February 7, 2018
  • Feature: On Perceived Value: It Only Has Value if You Believe it Has Value, by Van K. Tharp, Ph.D.
  • Workshops: Our $700 Early Enrollment Discount Ends TODAY!
  • Tips: Is the Short-Term Bottom In?, by D.R. Barton, Jr.
  • FREE BOOK!: Trading Beyond the Matrix
February Workshops
Our mission at the Van Tharp Institute is to help people transform themselves, and the Peak Performance 101 Workshop is the key workshop we use to teach people how to do it.

If you learn how you control your trading results, you've accomplished something that will help you immensely, plus, this workshop is also a prerequisite to applying for our Super Trader Program.

Peak 101 and Blueprint for Trading Success are presented back-to-back in February. This is the only US presentation of Blueprint in 2018. We encourage you to take action now. These two workshops have the potential to change the way you trade, and as so many students report, the way you live your life even aside from trading. (Note: Peak Performance 101 will also be held in Sydney, Au in March). Attend both February workshops and save even more with the combo discount.

Feature Article

On Perceived Value:
It Only Has Value if You Believe it Has Value
by Van K. Tharp, Ph.D.
Van Tharp photo
When I was a young boy in the 1950s, probably half of the children I knew collected stamps (the stamp experts tell me it was actually more than that). Stamp collecting was one of the most significant hobbies in the world and we all grew up expecting our stamps to increase in value over time.

Maybe so many people collected stamps because it was so affordable in those days. A regular U.S. postage stamp cost three cents. If you wanted to buy all the stamps issued by the government each year it would cost you perhaps 30 cents. If you wanted to buy a plate block (a block of four stamps with the plate printing number on it) it would have cost you 12 cents. You could probably have bought the plate blocks of all of the stamps issued for a total of $1.20 each year.

In 1971, however, the federal government formed the US Postal Service and stamps jumped to 8 cents. Furthermore, the Postal Service relied on postage for revenue so they issued as many as 25 different stamps each year. Some of the stamps were multiples, requiring collectors to buy a block of many stamps. So for a child to collect one of each postage stamp for the year might cost $3.20. Plate blocks were often large multiples of stamps (as many as 20) so a single plate block might cost $1.60 — which was more than the cost of buying all the plate blocks for a year in say 1955.

I continued to buy most plate blocks every year as recently as 2005. But in 2005, the cost of each postage stamp was 37 cents. Typically, 20 stamps made up a plate block and that cost about $7.40. But some stamps were issued in sheets of 50 different designs requiring you to buy all 50 for a cost of $18.50. To buy all the plate blocks that came out each year could easily cost you over $100. Just a few weeks ago, the USPS raised the prices of stamps to 50 cents. Fortunately, I stopped the expensive habit of buying plate blocks in 2005 or so.

If in 1958, you had faithfully bought and kept every plate block of that year, it would have cost you $1.20. What do you think that $1.20 worth of stamps would be worth today? Based upon the idea that old stamps should have kept up at least with the price of stamps, you might guess each 1958 stamp would be worth about 50 cents now. That $1.20 would be worth say $20 — but that’s not the case. You can probably sell those 1958 stamps at about 85% of their original face value. In fact, that kind of valuation is probably what all the stamps you collected are worth today. You would have lost not only from an inflation standpoint but you would have lost out on the simple face value of the stamps as well.

And this trend is not new. Bill Gross, the Bond King, once remarked that his mother had bought him a sheet of every US stamp for many years and thought of them as an investment that would pay for his college.
My mom started [collecting] in the late 1930s in anticipation of her three kids going to college and bought newly issued commemoratives, [paying] $3 for a sheet of 100. She hid them away for 20 years or so, and by the time I was 17, she presented them to me like magic beans. She said to take these into San Francisco, sell them, and whatever you get is going to pay for your college education. They must have weighed a hundred pounds. There were hundreds of them. So I hopped the train [to] San Francisco. I took them with high hopes to four [stamp dealers], and none offered me more than what my mother had paid 20 years ago. I knew that wouldn't pay for my college education. The magic beans weren't worth anything. The look on my mother's face was total depression. Fortunately, I got a scholarship to Duke otherwise, I was going to junior college. (this modified excerpt originally appeared in the Bond King’s commentary from Pimco)
In spite of his early experience with stamp collecting, Bill Gross decided that the key to investing in stamps was to buy stamps only issued before the mid-1930s and to specialize primarily in 19th century stamps. It’s estimated that he spent between $50 million and $100 million buying old stamps. At one point, he sold a small part of his collection at a charity auction in 2010 which netted the charity about four times his original cost. That prompted Gross to say that “investing in rare stamps was better than investing in the stock market.”

Gross has been an impressive collector. He bought a plate block of the inverted airmail stamp for about $3 million (it was a one of a kind) and then traded that for the only Z-grill stamp available for sale (the other one was permanently locked in the collection of the NY Public Library). At one-point Bill Gross had compiled a complete US stamp collection. He is probably the only man to have ever achieved that and probably the only man who ever will. Eventually, Bill Gross donated his complete US stamp collection to the US Postal Museum.

I remember visiting the US Postal Museum in Washington DC some years ago because it was displaying the NY Public Library Collection. I saw both Z-grill stamps in existence, Bill Gross’ copy and the NY Public Library copy. There I was in this fabulous place looking at all of these incredible stamps and it should have told me something that I was the only person in the exhibit.

Around 1999, I had bought 5 rental properties in Virginia through an investor from John Burley’s real estate bootcamp. It was a $35,000 investment for me and for the first few years, it earned about a 50% return. As a result, when this investor told me a few years later that he could now buy homes in Tennessee for 1% down and thus make better returns, I jumped at the chance. I invested another $35,000 and the next thing I knew I had 15 properties in Tennessee. My investor, however, had broken all of his investing rules and he paid full retail for the properties. Suddenly, he wasn’t sending me any profit checks because he couldn’t pay his bills (much less the mortgage payments). The net result was that from 2007 to 2009, I took a loss in the Tennessee properties of about $350,000.

I stopped collecting stamps after 2007 when I was missing only about fifty 19th century US stamps. Most of those would have cost me between $5-10K each to obtain because only 30 to 50 stamps existed for each. After the real estate investment loss, I never really got back into collecting but I estimated that I had invested about $250,000 to $300,000 in stamps over many years. I hoped that my collection had at least doubled in value. Part of me doubted that, however, because I continued to monitor on eBay the auctions for the stamps I still needed to complete my collection. I would save the search and it seemed that the same stamps were still available at the same price — a year or two later.

When I was in London last October, I talked to the people at Stanley Gibbons to get some advice about possibly selling my collection. They said they’d sell it for me if I gave them the entire collection. It would take about a year to organize but they would feature a Van Tharp collection at auction. They probably charge a 15% buyer’s premium and they would charge me a sellers premium of 5%. I would have to wait a year but that seemed OK.

I had told my wife that if something ever happened to me, the easiest way to sell my collection would be to call Gary Posner, Inc and ask the people there to buy it. I decided to do that myself last month. We are in the process of buying a new house (before we have sold our current house) so I decided that I’d pretty much accept any offer for my collection over $175,000. I intended to keep my complete airmail plate block collection rather than sell that too but I am also really into surrendering to my Internal Guidance — which told me to sell everything and take whatever was offered. I did that.

What happened? Posner said the best way for me to get the most money was to sell the collection on consignment. They would sell it for what they could get and take a 15% commission. They offered me to pay me $50,000 up front and the rest in six weeks after the sale. They told me that the stamps would probably bring between $100,000 and $125,000. I don’t know if that amount was before or after they subtracted their 15%.

Hearing the news about how much the collection is worth now made me really sad for a day or two. This was right before my Infinite Wealth workshop last month. One of the principles I teach in that workshop is to turn non-productive assets into productive assets. Certainly, something that pays no income and goes down in value is not a productive asset. As a contrast, I put $30,000 into cryptocurrencies a year ago and by year end, it was worth about $150,000 (but it’s probably now at about $75,000).

Gary Posner told me that the stamp business is totally dying. People who used to be regular buyers are selling off their collections. Stamps that sold for say $80 perhaps 10 years ago are now worth little more than maybe $10 today. But he said that he has one collector who has invested about $3 million. He only buys stamps for which there are 30-50 in existence and he buys every one he can get of those. Perhaps he read my newsletter when I wrote about a strategy of buying up any of the remaining limited quantity stamps.

Last month, I also read the following post from June 2014 during the period when Posner said the stamp market was dying.
Tuesday’s sale of a British Guiana One-Cent Magenta postage stamp from 1856 — the only one of its kind still in existence — for a record $9.5 million at Sotheby's has put stamp investing back into the headlines.

The price fetched for the world's most famous stamp trounced the previous record auction price for a single stamp, which was 2.87 million Swiss francs (about $2.2 million) set back in 1996.
The article also said that there were 60 million stamp collectors in the world (a long way from 50% of the 1950s US population, much less the world’s population) and that one third of the current collectors are Chinese. More than 60% of Chinese millionaires invest in luxury goods, primarily rare stamps. Furthermore, Stanley Gibbons stated that the GB30 Rarities Index has never fallen in value in the past 60 years. During the the year of the stock market crash in 2008, the GB30 actually gained 38.6%. Overall, the GB30 Index has generated an average annual compound return of 10.27% since 1998. The newer and broader GB250 Index has generated an average annual compound return of 13.18% over the 10 years ending in 2013. Stanley Gibbons used to offer an investment program in rare stamps with guaranteed returns but they don’t do that anymore.

My point here is that value is all perception. Most people in the United States used to collect stamps but today it is a dying hobby. Still, stamps for which only 30-50 exist continue to sell for about $5,000.

Gold and silver have value because 1) they are rare; 2) they are used in jewelry and other goods; and people think of them as a backup to money. There have been many times in the last five years, however, when gold should have taken off but it didn’t. That seems to correspond with the development of Bitcoin. Is this a coincidence or not?

Cryptocurrencies are being talked about as a bubble waiting for a total collapse. As an example, however, Bitcoin has had three falls of 75% or more and three years when it went up nearly 100 fold. Right now the only way you can buy other cryptocurrencies is through Bitcoin.

And what about fiat currencies? We all think that our paper money has value because everyone accepts it and the government tells us that it is real — but it is just printed paper which governments created out of thin air. Nothing backs any currency except for debt in some cases and debt can actually be used to create more money in circulation.

The bottom line is that the value of anything depends upon the perception people have of it — which also changes over time. Look at the examples I’ve given:

  • Rare stamps
  • Gold (which was once used as the basis for money and backed paper money)
  • Silver
  • Fiat currencies now
  • Cryptocurrencies

Become more aware of your beliefs about the concept of value and about what you value.

By the way if you want any of the Van Tharp collection you have some time. Just contact Bob Prager at [email protected].
Did You Miss The Cryptocurrencies Webinar?

Trading Tip

Is the Short-Term Bottom In?
by D.R. Barton, Jr.
D.R. Photo
This week’s tip is going to be short and with any good fortune, insightful.

After the market went soooooo very long moving up month after month in grinding bull mode that traders and investors have just flat freaked out in the last week with the first 5% drop in almost two years. Actually, the S&P 500 cash index saw a peak-to-trough drop of 7.9% before Tuesday’s recovery. The other major indexes all hit correction levels too — at least on an intraday basis.

From what we heard in the media, it seemed like the end of the world… but there’s a good chance that we’ve already seen the near-term bottom. Let’s look at one chart that led me to that conclusion and then check another chart that might give us some guidance in terms of mileposts going forward.

Capitulation In 40 Minutes

On Monday, I told Stuart Varney on Fox Business Network’s Varney & Company that the tech stock rebound earlier in the day was a sign that stability was returning to the market. It turned out I was about three hours early on that call… The market still needed a capitulation move — that moment when buyers just give up and prices just collapse in dramatic fashion. The capitulation happened Monday afternoon:
The Dow dropped 1,606 points – 90% of January’s whole move up — in just 40 minutes. Watching it live was like watching someone jump off a high dive. We haven’t seen volatility like that since the 2016 election night. Overnight, global markets sold off as well leading to a down open on Tuesday, a quick retest of Monday’s low, and most importantly, a rejection of the capitulation area. That was a very solid sign that the near-term bottom was put in. I added long exposure by 11:30 Tuesday morning.

Where Next?

What mileposts do we have going forward? That’s the big question and this next chart gives us some good price zones to keep on the radar screen:
BTW, the bottom red line on the chart shows the 3x explosion we’ve seen in volatility.

The Fibonacci retracement levels on the chart are pretty key — we know that this retracement has some legs — we’ve already exceeded the 38.2% level. If the market eclipses the 50% and 61.8% zones, then we’ll be looking at a potential resumption of the bull. Any close below Tuesday morning’s low, however, would set us up for a quick trip to a full 10% correction on the S&P 500. But for the moment, my capitulation long trade is looking pretty tasty…

Your thoughts and comments are always welcome — please send them to drbarton “at” vantharp.com

Great Trading,
D. R.

Workshop Schedule

February 2018 - Cary, NC
Click the title of the workshop to see more about each.
Peak Performance 101 is Dr. Tharp's core psychological workshop, and his most transformative course for over 25 years. If you want to know how great traders think, behave and act so you can achieve consistent and profitable results, without stress, then this workshop is for you. Plus, this is a qualifying workshop for traders to apply for the Super Trader Program.
In just three days you’ll see how all of Van Tharp ’s strategic trading concepts fit into one seamless design for more predictable trading results. Your trading will never be the same.
This course illustrates the relationships among the steps so that the process is logical and reasonable. Moreover, you will learn how to take each step experientially, so you really get it. This workshop is filled with time-tested elicitation questions to bring forth each person’s most important issues.
March 2018 - Sydney, Australia
Do you want bigger and more consistent profits from the market?

If you want consistency and would like to make profits from the market, you'll want to attend this three-day workshop. We'll show you little-known, closely guarded secrets that you're not likely to find unless you accidentally stumble upon them yourself.

Are you a low-risk investor who just wants to make small, consistent profits each month with only an occasional loss? We can show you how to develop a system that will allow you to develop a unique methodology that will give you that kind of consistency!

Are you a gutsy trader who'd like to make yearly profits of 100%, 200% or even 1,000% per year? Although risky, it is possible, and we can show you how to do it! The interesting thing is that you can do it in such a way that the only money you're risking is the money you've already made from the market. That's real leverage!
What You Will Get In This Course

Beginning on Day 1, you’ll learn what the real Wealth Game is and, more importantly, what it isn’t. You will discover:

  • Who decides the rules in the wealth game
  • What money really is and why it doesn’t even matter
  • What is holding you back from creating infinite wealth in your own life
  • How different people think about money and why it matters
  • The single greatest method for infusing positive beliefs about wealth into your being
  • How to achieve infinite wealth in 7 simple steps

We’ll finish the day by playing a game that’s designed to get you thinking about the game of wealth in a much different way and to look at your patterns of behavior when it comes to money. You’ll learn more about yourself…your beliefs about money, and what’s possible (or not) just by playing this game.

On Day 2, we’ll start with a quick review before I share with you the exact same steps I took to create infinite wealth for my family and myself. You will learn how to model my success and achieve real freedom for yourself. We begin by discovering how to:

  • Become debt-free in less than 7 years, including your home, cars, credit card debt, student loan debt and more, all on your current income
  • “See yourself” infinitely wealthy with the same visualization techniques my Super Traders use
  • Invest in yourself to increase your income by 1000%
  • Use tax expectancy to your advantage as a trader and investor
  • Create inner wealth to achieve the freedom you seek

At the end of the day, we’ll again play the game to reinforce new wealth-building concepts while continuing to think of infinite wealth as a game to be played.

Day 3 begins with a review of the previous day’s notes and discoveries before we cover more in- depth inner work. Before you leave the workshop, you will know how to:

  • Overcome your weaknesses while fostering your strengths with SWOT analysis
  • Come back from a set-back, all with a unique mental resilience tool
  • Begin each day with a clear intention, simply by removing your limiting money beliefs
  • Use the matrix model to achieve infinite wealth
  • Get your life purpose in alignment with your financial goals
April 2018 - US
May 2018 - US
More 2018 Dates Coming Soon
June: Super Trader Program Members only. Options, Advanced Options and Cryptocurrency Trading

July: Peak 101 and Modeling Great Trading Through Mental Strategies (Peak 204)

August: Day Trading Systems and Live Day Trading. Plus, Trading in a Sideways Market

September: How to Develop Winning Trading Systems that Fit You. Plus, Peak Performance 202

October: LONDON! Peak Performance 101, Peak Performance 203, Forex Trading Systems, Live Forex Trading, and, Blueprint for Trading Success

Specific dates for the above events will be released soon and the workshops will open for registration at that time.

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Cary, NC Workshop Information
For a list of nearby hotels for our Cary, North Carolina locations, click here.

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