RECESSION - Investment Portfolio Update - July 2022
Investable assets, NOT including primary home, cars, collectibles, etc.
(Listen to audio version of me reading👆)
We are officially going to be in a recession however if someone has been paying attention at all they have known that for months…
My portfolio is conservative and defensive by nature, and because of the times we find ourselves in.
Just when people think the bottom is in recessions/depressions tend to humble you. My guess is it might not bottom for 12-24 months.
They will try to print and paper over it here we will be able to see what’s really going on as we measure stocks and the dollar against real assets.
We have the second edition of our monthly portfolio allocation and I note the changes in each of there 5 asset classes.
I am always a student. I am no expert. This is never financial advice, but only what I’m doing and what I see.
Real estate (positive cash flowing rental real estate)
We almost bought a house that would have been a rental property because we were trying to help the man that was living there because he was not in a great situation. That looks like that will not work though, for now.
We are currently putting an equity line on our primary home (which is a rental duplex technically) that is a variable rate but can do up to 100% LTV (loan to value). We aren’t quite pulling out all of the equity but it will be around 90% LTV. We want this cash to be nimble and be able to invest as things keep crashing in the coming months.
I know you might be saying, “VARIABLE RATE? YOU ARE CRAZY!” I do watch rates each day and over the the long term I believe they have to go down because of the massive debt we have incurred as a country. They could go up in the coming months or next year or so. However, I like the HELOC because I can pay it down right away and get rid of the monthly payment in a crunch.
Whereas we have done cash out refinances on other properties with lower FIXED interest rates, but then you are stuck for that full payment unless you pay off entire mortgage amount or refinance the whole mortgage again.
So, different tools are good depending on which job you are working on.
We have about ~37% in rental real estate.
**Remember that the dollar is debt. There’s nothing backing it so the further you can get into good debt and buy appreciating assets you will win long-term as government continues devaluing the dollar. (ie. Refinancing real estate and pulling cash out tax-free to invest in other assets will be the people who win long-term. Savers get crushed by inflation and minuscule interest savings rates.)**
Bitcoin (digital assets)
Bitcoin has been getting crushed the past month or so which is awesome. I was dreaming this may happen. Subsequently, I have been putting some chunks of our cash in beyond my weekly DCA (dollar cost averaging) as it has dipped below $20,000. I have manually bought some and I also had “buy orders” set on Coinbase Pro that automatically purchased an amount that I set up beforehand. Once the price hit that amount the orders got filled automatically.
I believe bitcoin is an incredible long term savings vehicle but Bitcoin the network is an even better freedom vehicle. We should think of bitcoin as something you will pass down to kids and grandkids and never sell.
And remember the REAL power lies in the fact that when you own and custody bitcoin in your own cold storage hardware wallet, you have become your own sovereign bank. No one can freeze you out of the system or steal or dilute your wealth.
There is Bitcoin, then there is everything else. Here is Fidelity’s executive summary and full report on this very topic: https://www.fidelitydigitalassets.com/research-and-insights/bitcoin-first
About ~17% in bitcoin.
**I expect bitcoin to become majority of my portfolio again in the next few years as it increases in value.**
Gold and Silver (commodities; oil wells, uranium, copper, wheat, corn, etc..)
This will hedge the chaos of the markets in the coming years. Gold has stayed about even on the year while almost every other asset has fallen big. It has done its job while silver is down a little bit. It is a leveraged play on gold.
Again, I would rather store my savings/retirement in appreciating hard assets like gold/silver/bitcoin rather than depreciating dollars.
We have ~14% in gold/silver to diversify in the analog world spread around different vaults and geographic locations that we can access in emergency.
Paper (stocks and bonds)
I have a couple percent in gold stocks, my company’s stock, Jessica’s small IRA from a job 10 years ago, and credit card points.
I am looking at moving the IRA in to cash and taking the tax hit so I have full control. Or I may purchase GBTC which is a leveraged paper play on bitcoin. Or I may try to move the cash over to Choice IRA which is a bitcoin IRA where you can invest in actual bitcoin and hold the private keys. (This just takes a few more steps)
Again, there will be a time for stocks in “phase 2” once the defensive positions and hedges (insurance) pay out.
We will then sell those assets or lend against them and use that cash to buy businesses, cash flowing real estate, and dividend paying stocks (dividend aristocrats.)
We have ~2% in stocks
Cash/Businesses
I still believe there will be more investments to buy on the cheap in the next 12-24 months.
This could also be cash or equity you have in businesses you own, private placements, limited or general partnerships.
I have buddies that are looking to start up real estate funds and a bitcoin mining funds. I look forward to deploying cash there and adding those businesses in this section and helping in any way we can.
Cash on hand is also good in case our long term view of inflation is wrong. If we experience massive deflation and the dollar increasing in strength, then we will be able to use the dry powder (cash) to buy many more assets.
I also have life insurance as well that I may roll in to whole life cash value at some point. Going to be talking to Ron Sneller about that at some point in the future and the pros and cons of that move.
~31% is in cash.
Conclusion
As you can see we haven’t really made any big moves in the last month however that will change possibly in the next 30-180 days. So stay tuned!
Just continuing to position ourselves and we have the two refinances we are working on to pay off private money lenders and pull cash out tax free. (Refi on our primary and one on a rental property.)
Trying to stay very liquid but I don’t want a ton of cash on the balance sheet for more than 12 to 24 months because you are paying an option premium of real inflation which is around to 15-20% each year.
Any investment you make has to be beating 20-24% each year Warren Buffett says. Keep that in ming when making an investment!
Soon we will also have refinances finished and I am really eyeing bitcoin as I am setting up to make some big purchases in bitcoin, gold, silver, private placements, and commodities VERY soon!
Stay strong,
Brandon
Ps. As stated before, this will be the introduction to a larger part of what we do going forward.
My newsletter is based off of 20+ years of historical, political, and monetary study plus my experiences in investing.
I spent the first 10 years studying politics and history.
The last 10 years I have studied monetary, fiscal history and policy, along with investing through what I call our “family office.”
I always mention to anyone that will listen: you must know the financial and money games for ANY of the political side to make any sense.