Book Review: Wealth Building Strategies in Energy Metals and Other Markets

Wealth Building Strategies in Energy, Metals, and Other Markets. 2010. Chris Waltzek.

Although not a pioneering work, Wealth Building Strategies in Energy, Metals, and Other Markets details easily accessible and timely methods for navigating upcoming investment markets that are sure to be stormy. Author Chris Waltzek, host of a weekly broadcast on GoldSeek.com, focuses on a few economically sensitive sectors — namely, energy, metals, and real estate. The book consists of three sections: “Successful Investing,” “The Housing Bubble,” and “Banking—Super Profits.”

In “Successful Investing,” Waltzek lays the groundwork for his investment philosophy and his vision for the markets over the next several years. He presents many familiar charts and tables that illustrate the rise and fall of precious metals over the decades, as well as historical interest and inflation rates. Readers will immediately sense a dose of “doom and gloom” in Waltzek’s outlook. For example, he spends several pages outlining a hyperinflation scenario that includes food rationing, possible starvation, and home gardening as more a necessity than a hobby.

Waltzek’s discussion of energy, contained in a single chapter, sets forth his bullish view of oil, together with several intriguing talking points for a proposed “Energy Manhattan Project.” Advocating increased use of nuclear power and improved mass transit, Waltzek provides little detail on the hows and whens but offers considerable food for thought. Only time will tell if his scenarios pan out, so perhaps he should have played devil’s advocate and presented some alternatives to his theories. For example, energy technology could make major advances or the political landscape could change.

The second section of the book, “The Housing Bubble,” contains little that has not been covered in dozens of recent books on the postcrash real estate market. Waltzek does, however, offer concise and practical metrics to be used as general benchmarks for assessing the relative value of the housing market. These metrics include the “100 × rent” rule, which states that homes are valued fairly if they are priced at approximately 100 times a comparable property’s monthly rental.

In general, Waltzek’s useful rules of thumb on valuation have held up over the last 50 years. Like many other housing prognosticators, he believes that the bottom has not yet been reached in the residential real estate market. He advances several compelling arguments to bolster his case, not the least of which is the alarming number of adjustable-rate mortgages due to be reset in the next 18–24 months. The bearish tone of this section could have been profitably tempered with some opposing views. The past 12–18 months have seen several signs that the housing market may have bottomed out. A short discussion on the supply side of the equation — covering homebuilders and lenders, for example—would have provided additional relevant information for analyzing the overall housing environment.

Waltzek proceeds from the housing crisis to a detailed, informative history of central banking in the United States. This disquisition provides a welcome backdrop to the scathing critique of current Fed policy that follows. The title of this section, “Banking — Super Profits,” might lead readers to expect to learn about attractive investment opportunities in the financial sector. Instead, the author continues his bearish tone by focusing on which investments to avoid. He recaps the dismal state of the housing market, the fallout from the woes of Fannie Mae and Freddie Mac, and the rising levels of both government and consumer debt. Although the points he makes are certainly salient and not without merit, they are too often overgeneralized and underdeveloped.

Wealth Building Strategies in Energy, Metals, and Other Markets is a book of its time. Within five years, much of the information in it will probably be outdated and of little use, except as historical artifact. Nevertheless, Waltzek’s efforts are not without value. He succinctly describes many problems that investors will face in the years ahead and proposes solutions to a number of them. His ideas tend to fall into the category of common sense rather than out-of-the-box thinking. Common sense, however, is not always so common in the financial field, and investors who possess it may very well be the ones who prosper.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.