How do you guys invest?

waarmstrong

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The only financial planning a financial planner is planning for is his our her own financial position.
 

Nimbus

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The gutters are full of investors who presumed to predict, "When this or that will happen..." Mr. Buffett's successful, but dry, seemingly mundane, advise to diversify for the long term does not rely on crystal-balling the future.
You mean the same Warren Buffet who is currently sitting on $122 billion in cash instead of investments? That’s almost 40% of all the money he’s in charge of.

 

FireEye

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The only financial planning a financial planner is planning for is his our her own financial position.
What I meant by financial planning as in putting your money where financial institutions have more control than the client/conventional financial planning. It makes people think from scarcity instead of prosperous mindset.

I am a believer of prosperity where the freedom is on me. Typical financial planning will measure you based on net worth while I believe in cash flow. Cash flow no matter what age we are is what lives our lives with us. So I always be looking for investment that provides cash flows. This gives me the control over my own money, not the financial institutions or my financial advisor. Typical example is government program, it will make you give up control of money to the gov. It will not let your money to move...

Just like our body, the more we move the healthier we become, this principle applies for money....the best investment is in products that allow you to move the money through, bc if you can get your money move through the product then your dollar can multiply/your dollar can do lots of other jobs.
 

FireEye

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You mean the same Warren Buffet who is currently sitting on $122 billion in cash instead of investments? That’s almost 40% of all the money he’s in charge of.

Cash flow vs net worth as I have described above, hence I don’t disagree with Buffet at all.
 

Nimbus

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Cash flow vs net worth as I have described above, hence I don’t disagree with Buffet at all.
That is plain cash, not cash flow. Buffet himself said that he hates cash, because it doesn’t grow. The fact that he’s keeping that much cash around only means that he can’t currently find enough good investments, the ones where the reward outweighs the risk.

One way the rich becomes richer is by buying stocks and properties when a recession makes them cheap. If Buffet uses that $122 billion to buy stocks today, he’ll probably get less than in 5% return next year, while running the risk of losing 50% of it when the recession hits. If he keeps the cash and buys at the bottom, he’ll double it within 6 years.
 

FireEye

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That is plain cash, not cash flow. Buffet himself said that he hates cash, because it doesn’t grow. The fact that he’s keeping that much cash around only means that he can’t currently find enough good investments, the ones where the reward outweighs the risk.

One way the rich becomes richer is by buying stocks and properties when a recession makes them cheap. If Buffet uses that $122 billion to buy stocks today, he’ll probably get less than in 5% return next year, while running the risk of losing 50% of it when the recession hits. If he keeps the cash and buys at the bottom, he’ll double it within 6 years.
Or he could be just waiting for a good deal.

Talking abt the rich, the one thing I always remember from one of the book I read. The rich has lots of money but the wealthy don’t worry abt money. And i defined being wealthy essentially being financially free. Not saying everyone has to be Buffet, but if I quit my job tomorrow, I will be able to continue maintaining my current lifestyle from passive income flowing in from my assets and investments.
 

Nimbus

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Or he could be just waiting for a good deal.
That’s basically what I said. Today there isn’t enough good stock investment deals, so he keeps almost 40% of his fund as cash under the mattress.

When the recession hits, he’ll be able to buy most things at 50% discount or lower. Buffet’s Berkshire Hathaway deals in property. They will scoop up a lot of cheap real estate when people fall behind on their mortgage, and bankrupt companies stopped paying rent. He’ll go to the banks suffering a liquidity crunch and wave green cash, so they’ll sell their asset at even more discount.

Since you deal in property, it’s an opportunity for you as well to follow his footsteps. Next year there could be a lot of cheap / discounted real estate properties available.

I was here in 2009 when foreclosed houses were selling for very low prices. Too bad I didn’t have money to buy any.
 

FireEye

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That’s basically what I said. Today there isn’t enough good stock investment deals, so he keeps almost 40% of his fund as cash under the mattress.

When the recession hits, he’ll be able to buy most things at 50% discount or lower. Buffet’s Berkshire Hathaway deals in property. They will scoop up a lot of cheap real estate when people fall behind on their mortgage, and bankrupt companies stopped paying rent. He’ll go to the banks suffering a liquidity crunch and wave green cash, so they’ll sell their asset at even more discount.

Since you deal in property, it’s an opportunity for you as well to follow his footsteps. Next year there could be a lot of cheap / discounted real estate properties available.

I was here in 2009 when foreclosed houses were selling for very low prices. Too bad I didn’t have money to buy any.
Yea, the way I built my property business has been solely based on opportunities 😊 I bought all these houses either on foreclosure or people needing to sell fast when the market is at the lowest. Depending on the location too, the last purchase I made was in South Jakarta, I got a deal of $25k below the market price when USD was IDR15k, banjir free location 5mins from train station. Cost me less than $100 to transfer all the cash to Indonesia.

Some of the cash came from the piece of land I bought 10yrs ago in Jakarta for IDR35 juta and I sold it this year to Bintaro Jaya for IDR450jt 😊 All opportunities just happened at the right time which I’m grateful for. That’s the reason why for me, it is super important not only to have savings for emergency but for opportunities as well and having investments where the money can move through and the control is on me, then I can grab many more of these opportunities.

But at the same time, controlling my own lifestyle inflation, don’t do what the 90% do. I think having a poor background and working hard to earn things helped me alot to stay frugal.
 

waarmstrong

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You mean the same Warren Buffet who is currently sitting on $122 billion in cash instead of investments? That’s almost 40% of all the money he’s in charge of.

Good point, but I don't believe that signals a change in the Buffet investment strategy. I have no idea why Warren is hording a record proportion of his assets in cash. One guess is he, like many, is on a self imposed hiatus while a volatile, vindictive President lurches, almost daily, from crisis to crisis. Interesting, as well as perilous, times.
 

waarmstrong

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I don't think Buffet is turning into a market timer. Perhaps the deals he is exploring simply have not come together for any number of reasons.
 

jstar

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he keeps almost 40% of his fund as cash under the mattress
Against an interest rate of 0.1% (and then you're lucky, there are many countries with negative interests now) that's not considered a very good investment though. And if the crisis doesn't come...

If you really expect a crisis, you'd go for gold btw.
 

Banana72

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Made a mistake with silver a few years ago...didn't buy much, just a few coins..thinking that those who thought gold were too expensive might look at silver...well, a few years later i probably about breakeven.
 

Nimbus

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I don't think Buffet is turning into a market timer. Perhaps the deals he is exploring simply have not come together for any number of reasons.
Buffet’s strategy is known as “value investing”. He finds stocks that have good fundamental earning potential but are undervalued.

Assuming he’s not timing the market, the fact that he’s hoarding cash means most of the investments available today are overpriced. When things are overpriced, a market correction always follows eventually. Another name for a correction is a recession.
 

FireEye

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Assuming he’s not timing the market, the fact that he’s hoarding cash means most of the investments available today are overpriced. When things are overpriced, a market correction always follows eventually. Another name for a correction is a recession.
Overpriced or too hard of a game to be figured out like billions of $ from his retail stock he trimmed himself from.
 

FireEye

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Made a mistake with silver a few years ago...didn't buy much, just a few coins..thinking that those who thought gold were too expensive might look at silver...well, a few years later i probably about breakeven.
Even I will never do gold again. For me, I treated my gold not more than easy money under my pillow.
 

waarmstrong

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The terms "over valued" or "over priced" and "correction" both are popular euphemisms for an expectation of a market down turn. A bit pretentious in my view. Describing the market's anticipated path in superlatives as in A "always" follows B could be correct as much as 50% of the time.

Another reason Mr. Buffett may be hesitant to commit his cash: he might be anticipating a Democratic Presidential election victory triggering a sell off. Would that an "always," a "never," or something in between?
 

Nimbus

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The terms "over valued" or "over priced" and "correction" both are popular euphemisms for an expectation of a market down turn. A bit pretentious in my view. Describing the market's anticipated path in superlatives as in A "always" follows B could be correct as much as 50% of the time.

Another reason Mr. Buffett may be hesitant to commit his cash: he might be anticipating a Democratic Presidential election victory triggering a sell off. Would that an "always," a "never," or something in between?
I’ve studied the graphs and the indicators lately, and you deemed it naught because it’s ‘pretentious’. You brought in the Oracle of Omaha into the discussion, yet when I pointed out that he uncharacteristically hoard so much cash, you invent another excuse to justify your belief.

The feds are about to cut interest rates the third time in a row, something they do only when they feel the economy is slowing down.

https://www.bloomberg.com/news/articles/2019-10-27/fed-to-cut-rates-again-but-what-comes-after-that-economy-week

They have been injecting hundreds of billions of cash into the market through their repo operation since September. The last time they did it was in 2008.

https://www.cnn.com/2019/09/18/business/ny-fed-overnight-lending-rescue/index.html

I’m really curious, are you challenging my explanation simply because you like being a contrarian, or do you actually have other economic indicators to base your opinion on?
 

waarmstrong

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Yes. Meaning the probability of a 2020 constriction, I think, is less than 50%. A downturn in the US economy is unlikely in part because 2020 is a Presidential election year. That being said, crystal balling is not a big factor in my investment decisions. Even if Buffett is not following his own advise, I am -- selecting a solid horse to ride is most important when the trail is unknowable.

You point out that the Fed is taking actions to forestall a feared downturn, but you are still anticipating a downturn. To continue to believe that there will be a 2020 constriction, you have to believe that the Fed is correct, and also that their efforts will be ineffective.
 

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