Right that’s why I don’t agree with large chunks of professional finance about it. I’m sure there’s some smart buy side money out there that agrees with me, but good luck finding them and getting your information in front of them without already being an insider and knowing at least some of the players in the game on a personal level.
Look you might actually be right about where I am at 38 vs where I was at 27-28 and was really trying to figure out if getting into a hedge fund was viable. I’m a lot smarter and a lot more well spoken now than I was then. I also have a track record of being great a capitalism that is so glaringly obvious at this point that I have no intentions of going back and finishing the bachelors in econ I need a class and a half to complete. I probably could get in front of a hedge fund and I probably could get a job.
Probably for less money than I make now. I might be making some Sklansky bucks because it raised my odds of becoming a billionaire from totally impossible to very improbable, but I am not Jeff Bezos lol. I have a really good job that I’m really good at and the security that entails is worth a lot to someone who grew up poor.
I will literally never find work/life/$$$ balance as good as I have it right now. Absolutely impossible. I ran hotter than the sun already I have zero desire to do another run out lol.
Dude you’re an incredible gambler. It’s not just judgement it’s also temperament. You simply keep thinking clearly even when uncertainty is maxed and everyone is freaking out. I’ve had the opportunity to watch you in high stakes situations a few times now and you just thrive there.
So yeah all of that stuff is great for you. I on the other hand am pretty profoundly mentally ill and I do not have the necessary emotional resources to deal with the massive swongs that go with being a truly great gambler.
So I grind out above average and hate every minute of it and then lose a sizable chunk of the upside getting out of the bet at the first remotely justifiable opportunity.
The great thing about logistics is that if I do my job well enough to start with I get this really satisfying frictionless transaction where everyone goes away happy. Really gratifying for my people pleasing tendencies. It’s obviously not always like that and sometimes the risks can get pretty insane, but I’m not successful in logistics because I thrive in those situations, I’m successful in logistics because I avoid them almost entirely.
When things are really really high stakes (really high conflict) I play a very solid ABC tag game until I find an exit ramp which I always take. The difficulty of emotionally regulating is so high that whatever advantages I have in normal situations are more than counteracted by the distraction of me having a panic attack the entire time lol.
You on the other hand in the exact same spot are having the time of your life and are about to feast on the carcasses of the people like me who just want to get home alive lol.
I was thinking about this some more. Let’s say you’re certain that you have a market beating strategy (I realize nothing is certain, but we’re hypothetical here), which is the better play.
Do what is suggested above. Prove you’re a winner and get people to invest. Charge them for the privilege. You can also invest in your own fund.
Don’t tell a soul and just print money on your own.
I guess the true answer is that it depends (on a lot of things), but I think I’d be leaning towards #2.
In a world where you can find the investors and charge them 2 & 20 (or whatever), the best move is #1 until you have enough money yourself to max out your strategy, then kick them all out and do #2 yourself.
The problem is that, for many strategies, once the strategy is known, everyone does it and it will no longer work. And if you have a legit fund with investors, you’re not really gonna be able to keep it that much of a secret.
This isn’t close. Someone that had a strategy that reliably generated a few percent of alpha and the right connections would/should become a hundred millionaire within a decade or two. Compounding that extra alpha on a six figure IRA? Not so much.
Thank you very much… Very kind. I would say I thrive on those situations usually, and I definitely have the time of my life in those situations in tournament poker, but in other situations (like the US Steel play recently) I tolerate the significant discomfort and try to make level headed decisions. Perhaps if I keep beating the market for 10 years, I’ll enjoy those situations more lol…
Whoa, I never said that if you kept it to yourself you would use it like that. You’d leverage yourself and pour everything into your strategy. But even then, I’d agree for a lot of strategies option 1 is the way to go.
Still not sure if I’m a sucker for having basically my entire net worth (excluding retirement accounts of my spouse and I and 529 accounts for my daughters) sitting in Cit Bank earning 5 percent interest.
40%: general market investments (most in broad market ETFs, some in Wealthfront’s roboinvesting thing, none actively managed)
20%: cash
other: home equity & lolcrapto
One could probably argue the cash allocation is still too high as it’s more than I’d need in an emergency. It makes me nervous that 80% of my money is directly tied to the performance of the stock market but that’s basically how our financial system is structured and as long as 1929 doesn’t happen again everything should be fine
The video @ParlaySlow posted above here was interesting and is worth a watch; he mostly talks about the risk (over a long-term horizon) of holding cash compared to other assets, so maybe that would change your perspective a little, particularly since the idea of cash being “risky” is somewhat counterintuitive.
Maybe one way of seeing that is that the interest rate itself is inherently volatile and subject to whatever the Fed does with it, and presumably you did not over the last two years sell a bunch of assets in order to hoard cash at these high interest rates; rather, before 2022 that same cash was likely earning much closer to 0%, and if the Fed slashed rates tomorrow it would be earning 0% again, so the idea of getting 5% returns is really just temporary.
It really depends on your net worth relative to your retirement accounts and the 529 accounts and your stage of life. I currently have in the neighborhood of 60% of my net worth in cash or similar (I bonds), but a lot of it is bankroll and I’m a couple jumps in stakes away from where I’ll feel safe putting a lot of my bankroll into investments.
If I had a regular job I would probably have six months living expenses in cash, six months in I bonds, and the rest in the stock market. Then I’d adjust to take some risk off the table as I got older and as I got closer to my number.
Doing research on a stock today, I pulled up three of the most recent articles written by so-called financial analysts (very low bar here). The first two talked about how the company had no moat and no competitive advantage whatsoever. The first sentence of the third one was about what an incredible moat they have.
Yeah I mean, if you take my bankroll out of it, I’m like 67% IRAs and 33% emergency fund, and like 90% of my emergency fund is in I Bonds. My IRA is currently about 65/35 equities/cash and I’m actively trying to get it to 100/0.
So in your case (assuming you have a salary that covers your expenses), what I’d suggest is no more than a few months living expenses in cash, the rest of your emergency fund in something inflation protected like I Bonds (you can get most of the emergency fund into them over time, just stagger entry for liquidity’s sake). Everything else should probably be in stocks, bonds, or other investments.
Not really enough information to say, but if the money is primarily intended to replace income 10, 20 years down the road, then it’s probably not a rational allocation.
