Friends, Romans, Countrymen, lend me your wallets!!
I hope I find all of you home and well.
Let us talk about greed. Greed is not such a bad sin! Greed is what motivates us to strive a little harder, it makes us work two jobs so we can have more and it’s why we all invest and are not just content with our lot. We want more! Don’t get me wrong, greed can make some people a total arse – just don’t be a douche about it!
And there was never a better time to be greedy than right now! Recession creates opportunity. Now, you do not need to profit from misery, but we can get into that later. For now, let us talk about how to be a greedy little truffle pig and making the right choices.
What is opportunity?
“Opportunity is a time or set of circumstances that makes it possible to do something.”
In a recession, you will find opportunity just about everywhere. I spoke on my YouTube channel recently about creating investment syndicates within your local community and then seeking out businesses within your area or networks that may need financial assistance through these times. This is a great way to pick up small pieces of equity in a variety of companies.
One of the things that you should take into account is your level of competency. You should always seek professional help to sanity check the opportunity you are looking to pursue and make sure you have all of the appropriate legal documents to support the process.
So, what type of investor are you? What do you know about the world of investing? Do you know what managed funds are, how to purchase stocks and bonds or what bonds are? Do you know why you purchased that investment property last year and understand what negative gearing is and its long-term effects? Have you heard of alternate investments or did you know that you can take a charge over a company to stop the movement of funds until you are repaid your debt?
I do not ask all of this to make you feel bad or so I can feel good about myself. All of these questions are very easy to answer with a little bit of research (or if you spend four weeks on it, you could become a fully-qualified financial planner. Haha ). You have to remember that economists and people who build financial products assume that everyone is financially literate. Once you have a basic level of understanding, these terms make sense in the context of your financial goals. This will also help protect you from any fast-talking sales guys. Yes, I put most financial planners in this category, right along with mortgage / property brokers and car salesmen. (I am 3 of these things so I am allowed to say it haha)
Let us call rule number one of being greedy: Self-Educate.
So “what is an opportunity and how do I find it?” you ask.
You need to be careful of the honey traps. A good example of a honey trap is recent happenings in the stock market over the last few weeks. There was a massive 30% hit on the market, which a lot of people saw as an opportunity to jump in. Most of these people had no real reason behind it other than it was significantly down, a honey trap.
I am not saying they were wrong to jump into the market. I didn’t do it, but I also was not one of those people that jumped on the bitcoin roller coaster either. The reason I did not get involved was that the first dip was mostly from emotion in the market due to COVID-19, which is not a true indicator of value. The actual catalyst was a steep negative movement from the impact of the Saudi – Russia oil price war.
Now, with one-third of the world on lockdown, the latter will have a massive and a real effect on global markets. Let’s take a closer look. If emotions can cause such a disturbance, imagine what a total global recession, and not just a slowdown of economic output, would do. This is the equivalent of walking into a glass door (c’mon… we have all done it). Sometimes things will push through, but mostly they bounce right off. This is the point at which you would look at quality companies for investment opportunities or take a position across whole market segments with index funds (thank you, Jack Bogal, you genius). If you do not know what an index fund is or who Jack Bogle is and why he is such a top guy then click the link on his name. This post is already too long so the last thing you need is me going on another tangent Haha.
At this point we would have the true movement and value of the market. This is the point at which you could cherry pick some good stocks if you want to try your hand at self managing and, again, seek advice. Also feel free to cheat, have a look at what Ray Dalio and Warren Buffet are doing today.
So, rule number two is: watch the Honey Trap.
Now, my favourite investment category, alternative assets!
Alternative assets are anything outside of the normal field of view. For most mere mortals, the only exposure you get to investments is either the share market or investment properties, so anything outside of the aforementioned falls into the alternative asset class.
These can include investing in someone’s business, purchasing part of a chartered plane or investing in tech, biotech or your crazy uncle Buck’s shower curtain enterprise (it has been a while since I snuck a pop culture reference in ).
“How do I find these?” you ask. Well, obviously you can use companies like mine (RAIC) that specialise in investing in and purchasing these types of assets. For the truly entrepreneurial out there, it is all about networking. As I mentioned earlier, right now is the best time to find amazing opportunities. Talk to people around you, not just about what they are selling or trying to raise funds for, but about what they do in their everyday lives. Go beyond their jobs and ask about their dreams. Take a genuine interest in the people around you. You would be amazed at the opportunities and joint ventures that have transpired for me just by listening to people.
Rule number three: Network
This hot little tip is possible one of my favourites. Share the wealth. My personal philosophy is “if you are not greedy, you make more money” (yes, I know that goes against the title, but you know what I mean). Build a network: talk to your parents, your kids, Fred over the fence, people at work… Build a syndicate of people to invest with and you will increase your network exposure to possible opportunities exponentially. You obviously limit your personal exposure to any one asset by pooling funds; however, the way I look at it is that you get more toys to play with. Haha. I like to get as many little pieces of as many companies as I can. This allows you to regulate income returns. If one market drops, another can rise to create an even income stream; losses in bad investments can be absorbed by good ones. I also love learning new things so being involved in new enterprises feeds my hungry brain.
The fourth rule of how to be greedy is: Share
Now, I wish this one did not need to be said; however, some people ruin it for all of us, don’t they? Practise good conduct: be a stand-up guy, deal in good faith, don’t backdoor anyone and respect people’s positions. If someone is hurting, be there to offer a hand. There is no reason that profit and kindness cannot go together. And if you do make your millions, please stay the same. I cannot tell you how many times I have built a monster of a company that generates a solid return, only to watch my business partners change into goblins right in front of my eyes. Don’t be one of those guys. Money is merely a by-product of living a fun adventurous life in the investment world.
The fifth and final rule: don’t be a douche (DBAD)
This is just a good rule for life in general
Gang, I hope you find these tips helpful. Please remember I am not giving advice. Consult professionals, crystal balls, read tea leaves and get a good accountant.
Love you all, be well