The Ultimate Cheat Sheet for Success in the New America

THE MOST IMPORTANT INDUSTRY NOBODY TALKS ABOUTElon Musk scammed everyone in Silicon Valley. My congratulations to him. I’ll tell you why in a second. But first let me ask:

Did you upgrade your phone or computer this year?

I didn’t.

Do you know why? Because this year’s versions did not solve any great problems over last year’s versions.

Take, as an example, the latest and greatest smartphone. The Samsung Galaxy Note 4.

Is it such a great improvement over last year’s Galaxy Note 3? No. It’s the same size. The same processor. Basically the same battery. Almost the same camera. Very little improvement to justify spending several hundred dollars.

What about the iPhone 6+? Yes, it’s a huge improvement over the iPhone 5. BUT, it has the same processor as the Samsung SIII. The same processor as a phone that came out two years ago.

There’s simply no reason to go crazy over the latest phones. The old ones have everything we need.

NOW, what if I tell you that the next phone will have a battery that lasts three months instead of one day?

Then the lines would go around the corner. I would definitely buy that phone. I would sell my wife for that phone (please do not forward this newsletter to my wife. You are my CHARTER subscribers. You’re special to me).

I hate charging my phone. Or trying to figure out if I need to pack a charger when I travel. Or forgetting my charger in the hotel room. Someone should solve my problem.

But is this a computer problem? Is it an Internet problem?

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No, not at all. It’s a chemistry problem. The problem is: “How can we extract more battery life from lithium?”

This problem is going to get solved. This is where billions in profits are going to be made.

Elon Musk’s battery-powered car company, Tesla, is a great example...

Because Musk’s first startup was PayPal, Tesla is a Silicon Valley-based car company that is roughly considered a tech company. It had the usual successful IPO at a high valuation. And very few people made a lot of money.

Who invested in the IPO? The same mutual funds that invest in every tech IPO.

What is Musk doing with all the money he’s raising?

He’s not using it to create better computer solutions in his cars. He’s using the money to build a BILLION DOLLAR battery factory.

He’s taking advantage of the leftover hype in the computer technology industry and transferring that money to solve a very difficult chemistry problem.

Right now, hiring chemists is cheap... For 50 years, graduate students have studied computers.

Guess what the average salary is for a programmer? I’ll tell you: $91,000.

The average salary for a chemist? $55,000.

Companies that solve hard chemistry problems will simply make more profits.

The Gutenberg Press largely solved a chemistry problem...

Handwriting ink tended to wash away with water or degrade over time.

Gutenberg strengthened the ink by making it oil based and mixing it with various other chemicals such as carbon, sulphur, copper, and lead.

An amazing thing happened after the Gutenberg-invented press started mass-producing books: Everyone realized they were far-sighted.

For the first time ever, people realized they didn’t have good enough vision to read a book.

This led to the development of the science of lenses. Everyone needed glasses.

Take it one step further and you have microscopes... then one step further and you have enormous advances in the field of chemistry... which led to great advances in everything from medicine to electricity (the development of the lightbulb was a chemistry problem – what compounds should be best used to conduct electricity).

But of course, it didn’t start with the Gutenberg press...

10,000 years ago, the discovery of agriculture was largely a study of how chemical compounds interact with each other to produce stable and storable food. Suddenly Homo sapiens switched as a species from nomadic tribes to domesticated cities.

Wheat domesticated us. Not the other way around.

The past is actually the best predictor of the future. And if you look at the past three thousand years, most problems have been chemistry problems.

Almost every advance in technology and civilization after that relied heavily on our deeper understanding of atoms, compounds, molecules, chemistry.

Until the 19th century... when the rise of mechanical engineering created the Industrial Revolution, and the rise of the computer created what later became the Internet Revolution.

For the past fifty years, most problems have been computer problems. And while computers and Internet tech will continue to get better (3D Printing, Robotics, and more), the big unsolved future problems (in energy, biotech, space exploration, and esoteric computer areas like DNA Computing and Quantum Computing, etc.) will be chemistry problems.

WHY YOU SHOULD INVEST WITH THE BEST CHEMISTS

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One company that IS a buy is Kronos (KRO), a company that makes titanium dioxide. You’ve used their products probably 100 times today. Titanium Dioxide can be found in everything from ink to food to sunscreen to paper and plastics.

The company trades for 10 times next year’s earnings and has a 5% dividend. Its market cap is just over a billion dollars, which means it’s tiny in stock market terms.

“Market cap” is a term for the size of the company. For comparison, Home Depot’s market cap is $145 billion. Apple’s market cap is $748 billion. Kronos is tiny in relation. This means it isn’t on the radar of big investors, which is good.

About a year ago, KRO’s top management made millions of dollars’ worth of share purchases – at

higher prices than exist today. There have been zero sales by top management.

One of the top hedge funds I follow, Millennium Management, bought 81,000 shares last quarter. Additionally, two different banks have raised their earnings estimates on the company.

One of my strategies is I always like to invest with people smarter than me, at lower prices than they paid. It’s almost like I have interns with much more information than me and they are nice enough to give me a discount on everything they buy.

Billion dollar hedge funds and insider corporate executives usually know more than me about their companies.

Everywhere you look, there are chemistry problems waiting to be solved. But nobody’s talking about them. Right now, they’re not as sexy as Internet problems.

It used to be that, with the Internet, the big question was how to solve “the last mile.” In other words, how to get the Internet to be at high speeds in that last mile from the cell tower to your home.

Now that problem has been largely solved (WiMax, cable modems, etc). “The last mile” now tends to refer to “how fast can someone order sushi directly to his home” or “get a car service to pick him up.” These are content problems and not technology problems.

And it shows up in the public companies that are out there...

Apple’s year over year earnings growth is 12%. Google’s year over year earnings growth is -5%.

What about the largest companies in the chemical space?

Dow Chemicals year over year earnings growth to date: 38%. But apparently this isn’t sexy enough for

CNBC to talk about it.

In 2007, I used to go on CNBC every Friday night and every Monday morning. On one of the Friday shows they invited me to watch how the show was produced.

Mid-show, the producer walks over to me, “we’re just trying to fill the space between commercials.”

That’s how the average investor was getting all of their financial knowledge. A year later the world collapsed.

Back to chemistry:

DuPont’s year over year earning’s growth: 51%.

Apple and DuPont pay a 1.5% and 2.5% dividend yield respectively.

I don’t think the above two companies are Buys. They have had their run over the centuries and market experts have a fairly good idea how to value them. There’s a much better way to invest with mas-ter chemists who are solving huge problems... and making money doing it.

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THIS TECHNOLOGY ACTUALLY WORKS… AND IT PAYS DIVIDENDS

To come up with great ideas, be creative, and live an abundant life, you need to be physically healthy and have lots of energy.

When people say, “be physically healthy,” my gut reaction is, “I don’t want to go to the gym.” But I don’t have to – I just have to be engaged in active motion every day. This is how humans exercised for three million years, and it still works.

What you do every day (active motion) is more important than what you do once in a while (hard-core workouts).

Here are the 10 ideas I wrote down for myself to make sure I remain physically active, healthy, and energetic...

#1 The body is totally stiff in the morning and it can use a good stretch. Claudia insists that I do one sitting forward bend every day and I hate it, but I do it anyway because I feel the tension of the hamstrings release as I breathe into it. There is an easier version, which is to stand up, bend over and grab your elbows, relax the back and breathe there, hanging from the waist down. When you come up you feel like the world is all shiny and new...

By the way, this is extremely good for digestion and constipation issues.

#2 Put a note on your phone (i.e., Google a reminder) that reminds you to relax your jaw, relax your face, relax your mouth, take a deep breath and even relax the shoulders.

Bet you that just reading that made you do it. It is amazing how often we tense our face and shoulders during the day. That costs you energy you don’t need to spend.

#3 Some people use walking machines while writing at their desk. I am very fond of the idea but haven’t tried it yet. What I do instead is take an actual walk in the middle of the day, together with lunch, because it helps me clear the mind and the negativity that accumu-lates from stress.

When I’m on the phone I always walk around my house. Some days (depending on my phone calls) it could be miles of walking.

#4 I always take the stairs if possible, and we make it a family game to always park the car as far from our destination as possible to get more walking out of the day.

#5 We spent most of our lives slouching. We are so attached to computers that our bodies get deformed. We start by curving the back and then sticking the jaw forward to compensate. We are

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unaware of it moment by moment... and then 30 years later we wonder what happened.

But there is an exercise that solves the issue: Every hour, stand up with feet at hip distance apart, inhale, put your hands on your lower back and look up, then exhale and bend the torso backwards slowly... Then stay there for one or two breaths (I usually max out at one and a half breaths), then INHALE to come back up. If you exhale when coming back up you’ll get dizzy.

I do this exercise because it completely has eliminated back pain for me.

#6 Whenever you’re standing in line, or waiting for a subway or a ride, or waiting for anything at all, stand onto your tip toes. Balance up there. This doesn’t seem like much, but it’s a huge balancing act for the whole body and warms up the calves.

Balancing also lights the brain on fire, activates the neurons, and increases creativity.

#7 Distribute carrying weight efficiently. I see people in Grand Central Station walking with their right shoulder one foot lower than their left shoulder... That’s because they are carrying a heaving bag on the right shoulder and they’ve been doing it for years... Amazing how much you can tell by posture. Don’t do that to yourself. Distribute carrying weight so that both arms have about the same amount of weight. Your body will thank you.

#8 Volunteer to do the dishes. This gets you standing and moving instead of sitting. Add laughter to this by listening to a comedian on the free Pandora app.

The trick here is: make sure the dishes are spotless. There’s something very beautiful about the focus required to wash dishes correctly. It’s good exercise for the brain.

#9 Do a few push ups randomly. Don’t even get close to breaking a sweat. Just do a few easy push-ups.

#10 This may sound like a funny one, but if you have lots of back pain, it may be because your financial issues are stressing you too much.

There is a guy called Sarno who wrote a book that even Howard Stern recommended. Sarno says that too much financial stress on our system blocks blood flow into the tissues that support the structure of the back. It appears that our back has been hurt, but in reality, we can’t handle the stress.

If this is happening to you, make a plan for dealing with the stress going forward. Don’t try to bury it... Your back will pay.

THE WAITER’S PAD

10 WAYS TO GET MORE EXERCISE FROM EVERYDAY LIFE

I always carry a waiter’s notepad to jot down ideas. Making a list of 10 every day is great way to flex your brain muscle. Some of my best ideas have come from these lists. Every month, I’ll share a list with you...

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Every now and then I will share not only my ideas, but the 10 ideas of others.

I’m very privileged to know Kevin Kelly. He’s a co-founder of Wired magazine. He also helped start an online community, “The Well,” which predated the Web and was my first experience with online communities.

Kevin came up with the concept that all you need to make a living (and buy back your freedom) is “1000 true fans.” I’ll write more on this later, but you can read about it on his excellent blog, kk.org. Suffice it to say, anything Kevin says is valuable. And I encourage everyone to read him.

A few years ago he wrote his “10 Rules for the New Economy.” The list can also be found on his blog, but I wanted to reprint it here.

#1 Embrace the Swarm. As power flows away from the center, the competitive advantage belongs to those who learn how to embrace decentralized points of control.

#2 Increasing Returns. As the number of connections between people and things add up, the consequences of those connections multiply out even faster, so that initial successes aren’t self-limiting, but self-feeding.

#3 Plentitude, Not Scarcity. As manufacturing techniques perfect the art of making copies plentiful, value is carried by abundance, rather than scarcity, inverting traditional business propositions.

#4 Follow the Free. As resource scarcity gives way to abundance, generosity begets wealth. Following the free rehearses the inevitable

fall of prices, and takes advantage of the only true scarcity: human attention.

#5 Feed the Web First. As networks entangle all commerce, a firm’s primary focus shifts from maximizing the firm’s value to maximizing the network’s value. Unless the net survives, the firm perishes.

#6 Let Go at the Top. As innovation accelerates, abandoning the highly successful in order to escape from its eventual obsolescence becomes the most difficult and yet most essential task.

#7 From Places to Spaces. As physical proximity (place) is replaced by multiple interactions with anything, anytime, anywhere (space), the opportunities for intermediaries, middlemen, and mid-size niches expand greatly.

#8 No Harmony, All Flux. As turbulence and instability become the norm in business, the most effective survival stance is a constant but highly selective disruption that we call innovation.

#9 Relationship Tech. As the soft trumps the hard, the most powerful technologies are those that enhance, amplify, extend, augment, distill, recall, expand, and develop soft relationships of all types.

#10 Opportunities Before Efficiencies. As fortunes are made by training machines to be ever more efficient, there is yet far greater wealth to be had by unleashing the inefficient discovery and creation of new opportunities.

10 NEW RULES FOR THE ECONOMY

Titanium dioxide consumption has a new source of demand that will act as a tailwind for producers like Kronos.

When people think alternative energy they think solar power, wind energy, and various other unproven technologies for fuel efficiency.

It’s amazing to me how often the stock pundits on CNBC want to tout stocks that are government subsidized, don’t work, and have never been used successfully.

And then, of course, there are the deaths. In 2013, 163 wind turbine accidents resulted in people dying. Again, not something they like to put on TV.

How about something that actually works, is energy efficient, and is ALREADY useful: make cars lighter so they use less fuel. That’s what “fuel efficient” means.

When a car is lighter it uses less miles per gallon. Less emissions. Less money spent by consumers.

A NEW SOURCE OF DEMAND FOR TITANIUM DIOXIDE

THE SECRET TO A LONG LIFE

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The oldest living person ever was Jeanne Clement, who died in 1997. She was 122 years old.

That means just 15 years ago, there was a person alive who actually met Vincent Van Gogh.

The thing about living long is that it has nothing to do with medicine.

This is basically the entire flaw of medicine. Most drugs cover symptoms, or even get rid of symptoms, but they don’t cure the underlying causes.

When people asked Jeanne Clement how she lived so long, she never once gave “modern medicine” as the answer.

For one thing, we know that having good genes is good for longevity. But genes can be overcome in a variety of ways. I’ve spent the past ten years studying the lives of people who live past 100.

Doctors should be forced to do this study.

When we’re young, we often prepare for a good life. We’re ambitious and hungry and we want to succeed.

But at a certain point, you want to start preparing for a good death. This doesn’t mean death TOMORROW, it means that your life should be pleasant enough that death is far, far away. That, to me, is a good death.

Clement rode her bicycle until she was 100, despite not being very athletic. She lived on her own until she was 110, when she finally moved into a nursing home.

So what was her secret?

• She had a diet rich in olive oil (the Mediterranean diet)

• She laughed a lot (see the next section).

• She had friends. Friendship turns out to be the single most important factor in longevity. Always have someone you can tell your troubles to.

• I hate to say it, but keep a low carb diet. I love pasta. I can eat it breakfast, lunch, and dinner. But every research shows it’s probably not good for you. Which kills me. But I’d rather it kill me metaphorically than in real life.

• Always be active. Retirement is a myth of the Factory Age where you get a gold watch after 50 years of service and then die a year later. Keep active doing things you enjoy and being around people you love.

• Learn how to forgive. The weight of anger will bring you down to the earth and below.

What did Jeanne Clement have to say about Vincent Van Gogh, who would buy canvas at her father’s general store? He was “Dirty. Disagreeable. And badly depressed.” Not a good combination if you want to make friends.

As Warren Buffett said at the Berkshire Hathaway conference that I attended...

“If you want people to love you, you have to be loveable.”

I honestly don’t have any opinion on global warming. I hate to argue at parties. But many people have strong opinions. But more importantly, people simply want to spend less money on their commute. I like it when strong opinions also line up with the wallet.

Instead of using metal or glass, many cars in the past few years have started using a lighter thermoplastic called polycarbonate. Until recently, nobody wanted polycarbonate because it scratches easily.

When I was a little kid, after I watched the movie “Zorro,” I scratched a “Z” into my dad’s car. (Dad, I will now confess I did it. I’m sorry. Cars were easy to

scratch back then.)

Only in the past year or so car companies discovered that using titanium dioxide to coat the polycarbonate would improve its scratch resistance. Increased demand for fuel efficient cars is directly correlated to demand for titanium dioxide.

Kronos produces 10% of the world’s Titanium Dioxide. DuPont, which is at 16x next year’s earnings and a 2.5% dividend, produces 23% of the world’s supply. I expect KRO to catch up to DuPont in valuation metrics, which would imply anywhere from a 60% to 100% return in the short term.

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I’m a big believer that the next century brings something even more remarkable to the public: The downfall of corporatism and the rise of “The Choose Yourself Era” – an era where technology has allowed us to create our income streams and choose our freedom with greater opportunities than ever before.

The average multi-millionaire has over seven different sources of income.

SEVEN.

This doesn’t mean seven jobs. That’s impossible. And it doesn’t mean start seven companies. That’s also impossible.

Full time jobs are only one source of income. Even entrepreneurship is one source of income.

We’ll be looking at many different ways to build income streams. I will be sending out free letters as

much as possible with interviews with entrepreneurs and other innovators on how they chose their path to success. I will discuss many different opportunities in today’s world.

I’ve been on the board of a billion revenues staffing company. I’ve seen that industry explode.

How come?

Because companies don’t like people.

• They are now constantly afraid of a repeat of 2009 where they had to do mass layoffs

• They don’t understand all the new rules and regulations that have been imposed on them. They’d rather outsource that to employment agencies.

It’s scary.

THE BIGGEST OPPORTUNITY OF THIS CENTURY

I wish I could say “buy Uber” because I use Uber every day and it’s so comfy to have that car waiting for me, and they have those little bottles of water, mmmph, and not have to use cash.

But the reality is, I probably use Kronos technologies more and don’t even know it.

This is how I look at companies and industries. It’s important to remember that last year’s bubble has never been tomorrow’s bubble.

It’s been 150 years since chemical companies have been fashionable in the public’s eye. This is going to change... Problems in computers, energy, pollution, medicine, will all rely on chemical solutions.

The original Dow Jones Industrial Average in 1896 was made up mostly of companies that produced Titanium Dioxide. They got kicked off because the Wall Street Journal didn’t want to write about them.

But when I was a kid, I remember wanting

desperately that chemistry set. Wanting to make things explode. Wanting to watch when combining two things that would make something new.

In the next 12 months, I’ll look at companies in the rare earth space, aluminum, biotech, energy, etc., that I think are about to hit the public’s eye and explode upwards.

I’m not forgetting about computers. I come from that industry. I’ve built and sold two software companies. I’m an investor in many others. I even got thrown out of graduate school for computer science. Robotics, 3D Printing, the selling of information products (like this newsletter), online education, the changes in the staffing world that result from all of this innovation – are all areas I spend a lot of time looking at.

But this newsletter is not about stocks. It’s about the biggest opportunity of this century... ¢

WHAT I’M GOING TO SHARE WITH YOU IN THE NEXT 12 MONTHS

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I’ve been scared. I’ve been broke. I’ve been afraid I would never get a job or an income again.

This is the new generation of employment and not the corporatism that we grew up in. That we thought we were safe in.

And it’s not a choice of “should I be an entrepreneur or an employee?” I don’t think entrepreneurs have it any easier. There’s a high risk of failure.

The key is to develop multiple streams of income. Many of the tools can be found in my latest book, The Choose Yourself Guide to Wealth, and the special reports included with this newsletter.

But to get the mindset of developing those streams of income I’m a strong believer that we need to “choose ourselves” – to not be afraid of the gatekeepers that for so long we wanted to have accept us: a boss, a company, a colleague, an investor, a client.

To do this, I want to briefly mention what I call the “1% Rule” – trying to improve 1% in four different areas of life every day: physical, emotional, mental, and spiritual.

Physical: Being healthier. Sleeping well. Eating well. There are many new results out that have completely changed my conception of what these three things mean.

Emotional: Did you know that kids laugh 300 times a day? Adults laugh – on average – five times a day. Part of this is the responsibilities we have as adults. But also, I think we spend now less time with people we love and trust and who love and trust us. I always try to improve on this a little bit each day.

Mental: The idea muscle works like any other muscle. If it’s not used, it atrophies quickly. How can we exercise it? Simply writing down ten ideas a day. It doesn’t have to be business ideas. Or smart ideas. Or good ideas. Just ideas.

Spiritual: This doesn’t mean meditate or pray (although it could). It simply means being grateful for the life around you. Sometimes, for me, this is difficult. Which is why every day it’s a practice.

Building up on these four “legs” is what I call “The Daily Practice.” When I was broke and losing home and family and scared to death I would never come back, it was persistent practice in these four areas that became intricately linked with how I made money and achieved some success.

I didn’t want to write a newsletter at first. I give a lot of things out for free. But this message is important to me, so I started hiring and researching and finding new ways to create money and income.

I want to share that with the people who subscribe to this newsletter. I hope you will join me for this ride for the long haul.

I will also be going over more business models in future newsletters. If you have any questions, feel free to email me at altucher@gmail.com and I’ll try to answer them here each month or on my “Ask Altucher” podcast, where I often pull in experts to answer questions.

Every month, I’ll be providing a way to develop your idea muscle so it turns into a machine. For everyone who has tried these techniques, the results have been remarkable, creating opportunities, income, and abundance.

I’m going to Miami tomorrow. While I’m in Miami, if I go to the beach, I’m going to put on suntan lotion. Every year, I seem to burn more easily. The main ingredient of almost all suntan lotions? Titanium Dioxide. ¢

-James Altucher

IN NEXT MONTH’S NEWSLETTER:

A new, surefire way to make money in hard times (and how I missed out on a $300 million opportunity with it), and a new way to live to 100. Plus... how to get out of all kinds of debt (mortgage, student loan, healthcare, credit card, and IRS).