People ask me all the time (well the friends that know me well) how I always manage to walk away from the market relatively unscathed. The truth of the matter is I do it with a little bit of common sense, a lot of foresight, and big ole BULLSHIT meter. Being a former corporate executive in Healthcare, Advertising, and Manufacturing (weird combo, huh?) I can tell you that spotting the bullshit is pretty easy for me. So after many years of deliberation, I’m going to release my picks / portfolio to the people who actually take the time to read my rhetoric. I don’t claim to be any super financial genius, I don’t claim to be an avid follower of the markets (although I do a lot of that these days), I’m just a guy (who’s turned down a few opportunities to work at some hedge funds) who wants to share my knowledge.
There are a couple things one has to do prior to deciding to invest in the market. Investors all make the same mistakes; even the seasoned ones.
1. Don’t *not* invest in a company, just because you don’t like them. Case in point, there are tons of people who purposefully keep AAPL (apple) out of their portfolio, because they’re microsoft people. You’re investing with your heart, not your head. Look at the company as a whole, their market penetration, products, etc. Do you think they’ll be around in a growth capacity in 5 years, 10 years? Don’t answer me. It’s not the point. It’s about the point I’m making. While you may not like AAPL, or Exxon Mobil or any of the War / Weapons manufacturers, these are the companies that are fiscally sound and most likely to turn a profit. In other words, get over it; when it comes to investing it’s not your heart, it’s about making money.
]2. Look at where the world is going. Where are our exports going? or better yet, where are our imports coming in from? Chances are whoever’s making those products is doing pretty damn well.
3. If you’re looking for the quick “hit” you’re in for a big surprise. Nobody can predict the market and those who claim they have a system are full of ****. Day traders are nothing more than gamblers. If you tell me that you can definitively walk into a casino and play roulette with a “winning” system every time, prove it. I’ll put my money elsewhere in the meantime. If you’re not in the market for the long run, you shouldn’t be in the positions you’re in. I never play with “borrowed” money (margin), nor do I invest in anything I wouldn’t be willing to hold at least 2-3 years. I have the “buy it and forget it” attitude. I follow the stocks, but I know my picks will do well in the long run. So I just sit back and let it happen.
4. Buy low, sell high. We’ve all heard that adage, but the reality is you can never predict how low a stock price will go, but if the stock is undervalued (based on EBITDA) and their assets, you should be fine. Perfect example, CFC is worth about 20 per share, it’s at $7.00 right now. I bought in at 6.xx. Don’t get greedy, you need to be willing to take a risk, but a calculated one.
5. When you don’t have the time to manage stocks, look at mutual funds. Here’s a really important rule. Remember it, but also, remember that a mutual fund manager is still human and only as good as he/she can be based on experience. Do research and choose a fund that has a manager that knows their backyard.
6. When In Doubt, What is the UN doing? A lot can be told by the state of the world, politics, and military actions. Take a look at things like what would happen if this country got invaded by the US or if it didn’t! Look at their financial and political stability and where they’re headed. Bottom line.. If it’s worth protecting, there’s gold in them thar hills!!! If it’s worth invading, same thing. If we’re going to war, look at military stocks (“defense” contractors). If we’ve “stabilized” a government, look at financial stocks and most importantly, look at what the country has to offer. Now, this may sound fucked up, but there’s a reality to the fact that first world countries will “strip mine” the hell outta 3rd world countries. It’s just unfortunate, but if you don’t get rich on it, you’re gonna pay for it.. n’est pas? So if a first world country is going to do something like “rebuild” a nation or “introduce” democracy, it’s your tax dollars that are paying for it. So… If you get my drift; you might as well make money from it rather than lose money from it. The UN is incredibly ineffective at “keeping the peace”, but they are incredibly effective at making money for certain groups (AIPAC, Vulture Funds, Oil and Energy Companies). So.. take a good hard look at what the UN is doing and you’ll see where the opportunity is.
7. Don’t put your fucking eggs in one basket! Yes.. I used profanity, because most people just don’t fucking get it. They put all their money in energy, tech, or one country’s financial system and when it all blows up, they’re in a pickle. In other words, DIVERSIFY. If you don’t understand the meaning of that word, you shouldn’t be in the market.
So.. now that I’ve spouted my rhetoric, let’s see where I was, where I am, and where I will be..
My current holdings comprise mainly of international stocks due to the fact that there are certain countries I wouldn’t want to be in economically (read the financial news). If you can’t figure out what I’m talking about, just stop reading and assume that you should just put your money in bonds and CDs and call it a day.
I’m invested in:
Europe, Africa, South America, Russia, and of course Asia internationally. Most of these are funds and I carry roughly 1000 shares of each in my portfolio. My holdings include: TREMX (bought at $36), TABRX ($15), TRAMX ($10), EMCGX($21), PRLAX($48).
I have some US domestic stocks, but not many: CFC ($6), RICK ($24).
I even it out with some Gold ($830) and Platinum ($ 1912).
So.. If you take a look at how I’m distributed, you’ll see that YTD I’m doing.. *better* than most people are faring in this market. While I don’t believe Real Estate will devalue much further than where it currently is, I do believe lenders need a good spanking (and that’s what’s happening now). I never invest in REITs, I’d rather just buy it for myself and take the tax write-offs.
Where was I a year ago? Getting into these markets and pulling out of tech stocks for the third time in 5 years.
Where do I predict things are going? And here is where I get to prove I’m either a genius, or an idiot… *lol*
Long Term Propositions: Continue investing in the BRIC countries and Africa. I hold onto South America as a safety net. The mediterranean stocks are going to rebound due to increased shipping (SEE SHIPPING STOCKS) and demand for dry-goods will increase into Western Europe and Africa.
Commodities like Platinum and Gold will be relatively stable (+/- 10%) over the next few years unless the stocks tank, but the reality of this portfolio performing badly without covering losses is really minimal. In the meantime, I enjoy the offset from precious metals to shield me from the credit crunch.
OPEC will standardize on a basket of currencies and the US dollar will become increasingly weaker while the Pound and Euro will increase in value.
Central American countries will continue to prosper and real-estate and tourism speculation will do well. I will stay out of airline stocks, but move into European, African, and Asian Hotel stocks. Over the next 2 years, I will slowly move out of the Asian markets and move into African Natural Resources Speculation while increasing my holdings of South American stocks (particularly financial institutions in the Southern Countries of South America).
Technology is a dangerous proposition and continues to trade at ridiculously high P/E ratios and until that breaks somewhat soon, I’m going to stay out of there (AAPL, MSFT, IBM).. you get the idea. There’s more money to be made elsewhere without the pain and danger of a new technology completely decimating a staple technology such as (ink jet printers).
Biotech and Healthcare.. Stay the fuck away! Until there’s change, it’s just a really bad place to be. Take a look at companies like Merck that swing high and low. People love to sue and class actions are plentiful. Stay away.. for now.
Green Energy companies.. Let’s be honest, they’re novel, but unless we figure out how to make 50% efficient solar cells or decide the new pebble bed reactor technology is publicly acceptable, it’s not gonna go anywhere significant. Put some money in some companies if you will, but don’t expect amazing returns.
I would look into Eastern European stocks centered around Kosovo financial organizations. That’ll be a big one, but it’s a 3-5 year hold.
I’ve almost doubled my money in the last 3 years. So I’d say I’m either extremely lucky or I’m doing something right. While I am by no means giving people advice on financial planning or stock tips, I am merely pointing out my “personal” strategy. It seems to be doing well.. Hope this helps some of you reorganize your finances, because the heart is not where the money is.. it’s the head.
***I AM NOT OFFERING FINANCIAL ADVICE NOR AM I LICENSED TO DO SO, THESE ARE MERELY MY OPINIONS, SIMPLY, THE RAMBLINGS OF A MAD-MAN***