Oh boy. I started writing this article and then stopped to add in this warning first. This is one of those articles where I really have to remind you that I’m not a qualified investment advisor and I don’t consider myself an investment expert. I’m just a guy who has done a lot of research and has, so far at least, made some good calls with my investing. Always do your own, independent research on this stuff, and talk to a qualified financial planner if you have any detailed questions. Okay? Okay.
As many of you already know, throughout most of my investing life, my only real goal has been to simply NOT LOSE MONEY. That was always my only objective. I never had any objective regarding how much money I would make. I had desires, but no real set goals; I just didn’t want to lose the money I had invested.
I have been successful in this. I have literally never lost money in my portfolio in my entire life. That includes times when everyone else I know was losing their asses, such as the dot com crash and the recessions of 2000-01 and 2008. I have never had a negative return on any investment I’ve made if you look at time frames longer than a calendar year.
The flip side of this is that I’ve rarely made a strong return. Many years I make just 5% or 6% on my money. There were a few years I made just 2%. I think in my best year ever I made 13%, and that was very unusual. (This is excluding when I was flipping real estate in the 90’s and early 2000’s; I made a lot more than 13% back then, but that wasn’t what I consider “investing,” since that took real work.)
This was okay with me, and still is. As long as I never lose money, I win. One could argue that in the very low 2% years (which were rare, but happened), I really was losing money because my rate of return was below the rate of inflation. Fair enough. Regardless, I’m very good at not losing money. I think I’m the best person I personally know at doing this, including men who are older than me and have much higher net worths than I do. These guys lose money, freak out, and get angry or depressed about it all the damn time. I never do; literally never. As always, my objective is long-term consistent happiness, rather than making a lot of money in my investments a few years in a row only to see 40-70% of it vanish in less than a year because of some economic downturn or crash.
About a year or two ago, I started shifting my thinking slightly. Now in my mid-40’s, I’m just a few years away from age 53, where I’m shifting my Mission away from earning money and will be focusing on working for the joy of working, rather than how much money I make. At that point, my focus will shift away from making money to managing money.
I want to be fully prepared for when I hit this point in my life, so as of about a year and a half ago, I started managing my money more aggressively. In the last 18 months or so, I’ve had a much more hands-on approach to my investments, becoming an active investor rather than the mostly passive investor I’ve been my whole life.
I’ve done things such as:
- Done more research on investments that have growth opportunity over the next few years.
- Done more research on investments that will do well when the economy is poor, or when the stock market crashes, or when Europe finally goes under, and other negative events as the West approaches collapse.
- Taken advantage, as best I’m able, of sudden shocking, unexpected events, such as Brexit and the election of Tantrum Trump.
- Being more active in moving money around within my portfolios to and from various investments, rather than just letting the money sit here.
- Shifted a larger percentage of my investments to more speculative investments rather than real investments. (Though the majority of my portfolio is still in safe, boring stuff like cash, and will remain so. I still don’t want to lose money.)
- And so on.
My results so far? In the last 12 months, my portfolio has earned 37%. And that’s with a pretty diversified portfolio.
Quite a big difference from the 5-6% years I’m accustomed to.
Do I expect to make 37% every year? Of course not. The last 12 months is just one year, and it’s very possible to get lucky in one year. Regardless, to say I’m optimistic about my financial investing future is an understatement. I honestly would be happy, hell, very happy, at an average return of 8-10% over a prolonged period of many years. If I can push that average to something like 15-20%, I’m going to be one happy bastard.
2017 is only about halfway done, so we’ll see how I’ve done for the entire year in January. Then I’ll compare my portfolio results in 2018 and 2019. If I can pull huge returns like this three years in a row, then I will officially declare myself as onto something. But that’s a good two years away.
Regardless, so far, so good.
And no, before you ask, per my usual policy, I’m not going to tell you exactly what I’ve invested in (other than very general statements), so don’t bother asking. Again, I don’t consider myself an expert in this area (yet!) so if I were to give specific investment advice, I think I’d be doing you a disservice. And there’s also the thing about not talking about my finances publicly. I covered the basic list of what I’m doing above; for those of you with assets, I recommend the same. If after 2019 I’m able to maintain these kinds of great returns, at that time I will consider being more public about specifically what I’m doing, via paid ebooks and whatnot.
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So this means you would tell that youve put money in for example cryptos, ETFs etc, but wouldnt go into details which ones?
Have you considered that the Shiller CAPE is over 30? If I was a market timer, now is when I might move into CDs towards the goal of never losing money. Don’t get me wrong, I am envious of those who can consistently time the market. I just wonder if now is a good time to shift more into speculative stuff? I do see that you say you keep the majority of your assets in safe boring stuff.
More or less.
Uh, are you fucking kidding? Of course I’m aware! That’s why I’m shorting the stock market as one of my speculations. When the market crashes from its overvaluation, I’ll make a nice pile of cash. I can’t wait!
I agree; my biggest position is in cash, and will remain so. But that doesn’t mean I can’t speculate with a smaller percentage of my net worth.
As I said above. A) It’s only a small percentage of my overall net worth, that which I can afford to lose, and B) I’m betting ON a crash, not against it. Most (though not all) of my speculative investments will do very, very well in a stock market crash.
Lol, looking forward to the post when you show us how much you made, shorting.
So what did you put money into then?
Hopefully a lot. We’ll see.
You already know because I talk about my investments on this blog all the time. Gold, silver, ethereum, bitcoin, shorting the stock market, etc, etc.
Long any foreign stocks? I thought about researching latin american or asian stocks but my friend, who is a portfolio manager, said all equities will do poorly because everything is correlated in todays global economy…makes sense to me
Not lithium? Shorting stock market means you are not getting involved with it or you do but keep it to minimum? Any other cryptos that you think have potential? I am thinking about steem, siacoin and monero.
What about companies that clearly show potential continued growth trend? Or is this too risky because “the crash is coming”(TM)?
Just to add a few things to the discussion. After trading stocks, bonds and forex for over 20 years I note the following observations.
1. Position sizing and risk:reward are far more important factors when compounding an account over time than any particular type of investment.
2. Understanding risk and where you are wrong before you enter a trade is essential.
3. Demonstrate an edge with a good sample of data before increasing trade size.
4. The real money is made in the sitting.
5. Stocks correct over time or price.
6. Great trades all have a unique fingerprint consisting of accelerating EPS growth and institutional accumulation.
7. Win rate (how often you’re right) can be misleading. Focus on making your winners larger than your losers. Risk 1R to make at least 2R.
There’s a lot more to trading than I can put in a comment but hopefully there’s a few ideas for people to research further.
Yes but this is about trading. But what about long term investments?
I don’t buy it.
(Real) safe investment should NOT be tying your major investment in US Dollar.
Think about it.. whatever you hold your asset class of form, it will follow the devastation when the value of Dollar gonna tank(If you really think that US will really gonna collapse though)
Your end number will still same, but the value will be a lot less then. Hence, in the end it will destroy all of the return(in Dollar)
Yes. A basket of SE Asia.
Yes, a little in some diversified commodity ETFs.
I do not own any American stocks (with one industry exception I’m going to keep to myself). The American stock market is fucked.
Yes, several, but I’m not going to list them out here.
I more or less agree with your observations.
Not if I’ve massively hedged my dollars with gold, which I have. (Silver too, though that’s not technically a dollar hedge, but it would also help).
Also note scenario #3 here, where a future crash could be deflationary instead of inflationary; under that scenario the US Dollar would do very well (temporarily at least). I don’t know if that will happen or not, but I’m trying to be positioned for either scenario (inflationary or deflationary).
Just to clarify – a portfolio with a large position in cash earned 37%?
This seems like something that could potentially take a long time to learn well.
Yes. The cash earned 0% (obviously) so it had no affect up or down on the average of other positions.
What percentage of your portfolio do you keep as cash?
Most of my small ish reserves are cash on a bank account in euro and some (small) cash at home, and a bit in crypto. I am planning to move more into crypto and also into metal ETFs. Since euro is not dollar, do you think euro could also deflate? I am wondering whether I should be keeping euro cash on bank account/at home or should put as much as possible into other things.
I do not see a point of changing my euro into other fiat currencies, but maybe I am wrong. Is swiss franc still considered safe? What about Yuan – does it have potential?
Oh and by the way what about real estate, some people seem to think the market will also crash in some places due to a bubble.
What about European stocks? Same? Or different. Of course many of the industries and companies are closely linked, but I mean the ones that are not.
By this I am guessing you mean east Asia excluding Japan and Korea. So Shanghai, HK, Taiwan, Singapore? Or the developing countries in the region (also)?
Yes. Europe is collapsing faster than the US.
Better than the euro.
Yes, but I wouldn’t fuck with it yet.
In the West, that’s correct. Real estate is good but you have to be extremely careful, and ideally do it from a cash position.
Foreign real estate is much better.
Even worse. Again, Europe is collapsing faster than the US. Anyone with European assets is crazy (unless you’re doing something very unusual).
I have no investments in Korea or Japan.
All of the above. (Not Taiwan though.)
for ur soverign inner circle maybe for plat/diamond levels do you tell the guys in there which stocks/industries to invest in or could you? like after trump won you said you and pinkfirefly went to vegas, since those group of guys paying monthly are serious do you include what to invest ? if not whats a good way to get started
Thanks for the article.
Can you make more posts about taxes in New Zealand? Here’s what I found in comments on Nomadcapitalist:
A little secret … well New Zealand is actually tax free for the first 4 years residence as a transitional resident on foreign source income. If you get permanent residence right away, you have 4 years residence tax free and one paying tax on worldwide income at a top rate of 33%. Then you get your citizenship.
then another little secret. As a New Zealand citizen, you get to live and work in Australia for free, no visa or work permit required. And you can stay and live and work as long as you like.
Then another little secret, if you stay in Australia, and become tax resident, you get classified as a temporary resident FOREVER. That means you don’t pay tax in Australia on your foreign source income FOREVER. So you can lose your New Zealand tax residency and stay in Australia as long as you like tax free on foreign sourced income forever.
Also if you live in NZ but you business is registered in zero-tax offshore country, that would count as foreign income and hence not be taxes as per above?
What if they say that despite being registered abroad, the company is being managed by a NZ resident while he is in NZ so would they insist on taxing the company’s profits at NZ rate? I am confused about what counts as foreign income
I give those guys a lot more detail than I give the public, yes, but I still don’t lay out 100% of what I’m doing.
Nope, not talking about that.
Feel free to sign up for SMIC if you wish, but don’t sign up the the express purpose of learning my investing strategies; that’s a small component of things but investing is not really what it’s about.
I know. That’s fine, but I don’t ever want citizenship in NZ if I’m living there. Five Flags means you are not a citizen in wherever you live. If I decide I like NZ then residency would be nice, but not citizenship; I need that elsewhere.
I’m not sure. However my current plan is to be in NZ just under six months per year; that way I don’t incur any NZ taxation no matter what. That may be subject to change though.
To quote ZH*..
Read the full report here:
*) Trusted financial source by Taleb
**) Definitely NOT for regular ppl who read fool.com
Correct; always hedge your cash with gold.
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