Portfolio Construction and your 90 year old Grandma
The investment market right now is pumped up right now with FOMO.
There are more non-sophisticated investors than ever before investing.
Sophisticated investor is a term for those who are generally professional investors who invest as part of their career or who have a high level of experience & wealth. No that doesn't include you crypto Tantra teacher, you are not considered a sophisticated investor.
The great part of this is that more people are starting to think outside trading time for money, they can now see that creating passive income streams is possible for them even on an average income.
But, and there is a huge but.
Many of them are being lead by the blind who think they can see.
The blind who think they can see are those who are spreading stories of getting rich quick in totally speculative markets.
The blind who think they can see are those who are teaching others how to make money in investments but have never studied finance or economics, who know absolutely nothing about simple investment fundamentals and are teaching complex trading strategies that are based on short-term noise.
How is it that Ellon Musk makes a tweet and bitcoin moves by 20%?
How is it that bitcoin is a trillion dollar market cap?
How is it that Telsa trades at over 1000 times it's earnings?
FOMO lead by the blind who think they can see.
Some people will make a lot of money, and they have made a lot of money playing like this.
They will continue to inflate the market spreading totally speculative noise, then their wealth grows at the expense of the last few influxes of people get on the speeding train and pay insane prices for something without any intrinsic value close to the price.
There will be huge losers and a few winners.
I heard someone saying that their 90 year Grandma and her friends at the old age home are starting to invest in Bitcoin.
The train has left you guys.
This is investing based on hype, hear-say, and speculation. This is not investing, this is gambling.
if you were lucky enough to be one of the winners, the crypto market is unregulated and over the last 12 months had 100% rise in fraud cases and the $4billion that was stolen in crypto last year alone. Be very cautious.
This type of strategy, if you can call it that, is totally unnecessary to build wealth & create passive income streams.
I don't know anyone who studied finance & who worked in finance who seriously invests in crypto. It's not because they are old school, or because they are proud, or because they don't know. It's because they can see, they can see it doesn't make sense, they can see that it's a bubble about to burst.
I don't know when, it could be in a few months, it could be in a few years, but it will crash & burn.
I don't doubt the crypto currency will be a currency we will use in the future, but it's not there yet, and it will reorganise itself & look very different.
What I do know is that it's possible to build wealth & create financial independence without crypto, Telsa or gold. Without gambling. Playing the long-term game. Here are some of the steps I walk my clients through:
Learn the fundamental basics about investing using long-term averages. Diversify in companies that sell something, have assets & cash-flow. Know what the purpose of investing for you personally. Consider investing in-line with your values.
A note on investing in-line with your values maybe that looks like avoiding companies involved in environmental degradation, detaining refugees, weapons, alcohol. Or maybe you want to destroy humanity and so you weight towards these businesses. Whatever! But know that it's very simple either way.
I'm running a portfolio construction half-day masterclass on Thursday the 27th, $444 for around 3 hours to construct your own investment portfolio. Send me a message for the details.