Current Investment Portfolio – 2/12/2020

current investment portfolio

Before reading this, please note I am not a financial advisor (thank goodness) and am speaking based on study and experience. I’ll share my current investment portfolio for full transparency.

Conditions

There is a lot of fear and panic right now. To the average human being, and regardless of beliefs around COVID19, chaos is consuming a lot of people.

Still, following the wisdom of Nassim Taleb, there are many things that thrive during chaos and uncertainty; what he calls ‘Antfragile’. Smart investing and entrepreneurialism is one of them.

Take Michael J. Cullen for example. In 1930 (The Great Depression being 1929-1933) set up what we may now consider the first supermarket. Within two years he had done an equivalent of $100,000,000 of sales.

Another… If you have watched ‘The Big Short’, you will know how knowledge, connections and the right risk appetite can make you a lot of money. Michael Burry, one of central figures in the film/book noticed the housing market was on the brink of collapse and created a financial instrument to benefit from it. He personally made $100 million. His firm, Scion Capital, made roughly $700 million.

As the crowd runs around in mass panic and despair, the level of disorder provides enormous opportunity for those who can listen and spot signals.

 


Value Investing

The Intelligent Investor by Benjamin Graham is a fundamental book to learn about value investing. In one sentence and without going into detail, value investing is the art of buying undervalued stocks/shares in comparison to their intrinsic value. Read the book or consume some information online about how to do that.

This investment strategy is most effective with a long term approach. In our dopamine addicted world, long term and strategic thinking takes second fiddle to quick and short term returns. Not to say short term gains are not possible, far from it, particularly with all of the new investment vehicles they keep creating.

 


Current Investment Portfolio

My current portfolio is spread as follows:

Real Estate (equity) – 73.9%

Stocks – 2.7%

Crypto – 3%

Precious Metal – 6.7%

Cash – 13.7%

 

I started in Real Estate, hence the large percentage towards that asset class. While I’ll still continue to acquire property, I am reorganising my portfolio over the next couple of years. Real Estate is superb because it gives you cashflow while allowing tenants to pay down your debt.

I consider Crypto as speculative. I don’t think there are many people who really know what is happening in this space. Many people who claim to know just pray on people’s emotional drivers to sell them things. So be careful with crypto, I only put a small amount of my income into it when there is a pullback. The only reason it is higher than my stock portfolio is because of the extraordinary returns since I got involved in early 2017.

Precious metals are my safe haven. Although they may fluctuate in value compared to fiat currency, in the long term I can only see the prices increasing as the central banks keep creating more and more debt/credit.

I’m holding a larger percentage of cash than normal at the moment because of the level of volatility across the world. I want to be able to get into an opportunity as quickly and efficiently as possible.

 


Here is the performance of my fund and share account in 2020

Alexco acquired in June

Apple in August

Boohoo acquired in July

BP in June

Euronav in June

Intu (enormously risky which I expected to lose) – June

Moderna in March

Pfizer in September

Sabina in August

Viatris is a spin-off of Pfizer, which occurred in early November.

Total increase of 43.88%

 

I share this to get an idea of how the average person can get started and make good returns on their investment journey. I could (should) have performed a lot better with the level of uncertainty in the world this year.

 


The Barbell Strategy

The percentages may differ according to risk appetite, but essentially, this is where an investor has a large percentage of their stock portfolio in low risk and safe companies. Apple, Google and Facebook for example.

They will only put a small percentage of their portfolio in higher risk and higher reward. This might be a relatively new company in a new field. The risk is much higher, because the company could go bust and you’d lose your investment, but the rewards can be astronomical. Artificial Intelligence companies are an example.

There is no in between ‘middle-ground’, hence the barbell analogy.

 


Data

Be careful not to get overloaded with data. This is a problem with a lot of investors, they get lost in an ocean of numbers. This data cannot predict events that create wild swings anyway. In the same way as you could not have predicted Leicester City winning the premier league in 15/16. This isn’t to say don’t do a bit of research, just don’t get lost thinking you’re a data analyst. As you can see from the COVID19 pandemonium, most data people know next to nothing.

Look for value, what is cheap historically and what holds upside potential. Once again, no investment advice here.

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