‘Those Who Want To Stay Rich’
Earlier this week, I expressed some consternation at the frequency with which the word "bubble" is floated.
(And, yes, that's an example of a sentence accidentally coming together perfectly -- bubbles being things that float and such.)
I turned it into a semantic, borderline philosophical debate, but you needn't be familiar with Yuval Noah Harari to have gleaned something useful from the linked article. Setting aside the existential questions it posed (and those I posed in the comments) one si
Great piece. Reminds me of the Baron Rothchilds quote when asked how he became so wealthy. His response, “I sold early.”
Are we on the verge of discovering something like MMT for financial markets. Are we laboring under false conceptions that keep us from divining how financial markets move, equivalent to how MMT changes notions about sovereign debt. I ask as it seems all financial market wisdom at this point is fleeting. As an example; I believe in diversifying investments, yet I’m currently way overweighted in what traditionally falls into the equity category, though after careful analysis some of the ‘equities’ may be closer to fixed income as far as risk profile. So, while not putting all your eggs in one basket may still hold, perhaps the old 60/40 doesn’t apply. How about a 30/30/20/10/5/5 (I won’t pretend to know what those categories are).
The following is IMHO. But
A- it depends a lot on your wealth level.
B- it depends on how young/aggressive/risk-on you are.
I work in private wealth/HNW sphere. I think the following works well if you have meaningful assets.
1- a secure base throwing up enough annual income with little enough risk to sustain your (hopefully not too dispendious) lifestyle. Fixed income portfolios used to be perfect for that but alas. To a large degree, real estate is a great substitute but diversification is harder to achieve, especially as REITs aren’t perfect.
2- a mid section of riskier investments : PE & VC funds, ideally a portfolio of those. Again, hard to execute if you don’t have enough assets but they can cover the gamut from PE private credit yielding 7-9% with reasonable certainty to late stage tech VC aiming for 20+% annualized.
3- a basket of moonshots. Whatever. Direct investments in risky startups. Your own equity portfolio. Call options on TSLA. Bitcoin or other blockchain related startups. A trip to Las Vegas poker tournaments.
The proportion will vary in function of A and B. If you’re wealthy enough that 20% of your assets gener
In short, it’s a variation of the barbell strategy from Nicolas Taleb (it was a bad image in the first place since one side is meant to be a lot heavier than the other but it’s the name that stuck…)