... even if people just did the basics that can get them through a month or two of a really bad time, it would be a blessing.
The dictionary defines a portfolio two ways: 1.a large, thin, flat case for loose sheets of paper such as drawings or maps. 2. a range of investments held by a person or organization.
As you might imagine, when we’re talking about portfolio, we’re generally speaking about “investments.” But let me ask you this, what is an investment? Again, let’s look:
in·vest·ment Dictionary result for investment
/inˈves(t)mənt/ noun
...the action or process of investing money for profit or material result.
Now there’s the interesting part. Notice it’s for “profit” OR… material result. Therefore, you can have an investment of your time, if it produces a material result, or in education, etc.
To me, a portfolio is a range of investments, but those investments aren’t always for a monetary profit. It can be “material” also. As I wrote a while ago, few people take the time to “invest” in themselves.
I bring this up, because we have been creating a portfolio, featuring the absolute minimum risk, with what could be called outsized returns. Yet in the end, it’s simply ‘money.”. Now, don’t get me wrong, money is good and we all need it. But as the old saying goes, money doesn’t buy everything.
A friend of mine’s brother just came back from doing a news report in Venezuela. The stories he had to share with us, were quite eye opening. The lack of food, the lack of medicine, the lack of work, the lack of clean water, was all too real.
I got a chance to ask him if it was real or was it staged, those photo’s of people rummaging around in garbage cans looking for food. His answer was about what I’d expect. He said yes, depending on your economic status. In other words, people that had “money” could still find real food, but at stupid high prices. People that don’t have money are the ones you see scavenging for food.
The notion of the US ever becoming like Venezuela, is so foreign to people, they’d more easily envision a turd in a punch bowl. It just can’t happen. It’s impossible. We’re too rich, we have too many backstops, we have too many social systems in place, etc. Well, Venezuela was the richest country in South America not long ago. It also sits on one of the largest petroleum deposits on earth. How did it go so wrong?
Politics. Coup’s. Corruption. Socialism, bad deals, and a host of other ills, has brought Venezuela to its knees. When I asked Roger, what was the most important thing in Venezuela right now, he didn’t even hesitate. Food and medicine was his reply. In 2017 alone, 64% of Venezuelans lost weight, losing 25 pounds on average due to food shortages and an inability to pay for food. About a quarter of the population does not eat three times a day, and 82% lived in poverty as of 2017.
That number increased in 2018. Then there’s that “inflation” thing. This is what the IMF had to say about Venezuela in July of 2018:
IMF projects Venezuela inflation will hit 1,000,000 percent in 2018. (Reuters) - Venezuela's inflation rate is likely to top 1,000,000 percent in 2018, an International Monetary Fund official wrote on Monday, putting it on track to become one of the worst hyperinflationary crises in modern history. Jul 23, 2018
The following from Forbes:
Venezuela's economy has collapsed. This is the result of years of socialism, incompetence, and corruption, among other things. An important element that mirrors the economy's collapse is Venezuela's currency, the bolivar. It is not trustworthy. Venezuela's exchange rate regime provides no discipline. It only produces instability, poverty, and the world’s highest inflation rate for 2018. Indeed, Venezuela’s annual inflation rate at the end of 2018 was 80,000%.
As you can see, bad things can happen. But worse, and here’s where I’m going to stray off the reservation, for many of these people, Money isn’t cutting it. When you’re fighting against 80 thousand percent inflation, just how long do you think you can last? Not long. A dozen eggs can cost 150 dollars US in some places. Ask those in the Weimar Republic of Germany. A wheelbarrow of cash couldn’t buy a loaf of bread.
My point behind this is simple folks. Our nation will probably never experience the sort of thing Venezuela is going through, because of our banking systems printing money, and the US having the biggest military. But with the recent uprising of “socialists” in America, it’s not out of the question that we could indeed get taken down to third world status at some point. Worse, as I’ve mentioned in the past, I believe they are going to foment an “event” that rocks our markets, and forces us into a global monetary reset.
There’s VERY little you can do about it folks. Yeah you can buy bitcoin and you can buy gold and silver. But if they pull a fast one on us and devalue our “money” by confiscating Federal Reserve notes and replacing them with “Treasury dollars” or some other such scheme, the bulk of people’s wealth is going to get hit.
In fact the WSJ just came out and said that globally, some 11 TRILLION dollars worth of bonds are carrying a negative yield. Yes you pay the banks to hold the paper. If you think this is something sustainable, well, let’s just say we differ.
So one of the things I’ve suggested for many years, is that a portfolio is NOT just a vehicle for trying to increase your wealth. A portfolio has to also include the types of things that have value, even when the feces has hit the oscillator. Remember that definition of an investment? “or material returns??” Ask the local person in Venezuela if they’d rather have 20 thousand dollars, or enough food for 3 months, and the answer is clear. Give me the food. Why? Because sometimes you can have all the money in the world, but no place, or nothing to buy.
I remember a zillion years ago being in college. A friend of mine was a pot smoker, and one day he told me he was going out to score some. But he came back all sorts of dejected, and I said what’s the issue? He said, and I remember it to this day: Pot can help get you through times of no money, but money will not get you through times of no pot. In other words, he had the bucks, but his dealers had no weed to sell him.
That’s what’s happening in many areas of the world right now. Even the people with some money, can’t find anything to buy to feed themselves. Nor can they defend themselves from gang violence, rape, etc.
It’s fantasy for me to believe that everyone’s going to take all the precautions necessary to get through a long rough stretch. But even if people just did the basics that can get them through a month or two of a really bad time, it would be a blessing.
So your “portfolio” should obviously have gold, it should have silver. It should have some stock or option plays. It should have a bit of fixed income. But it should also include things that have tremendous value in a really ugly time. Forget for a minute the US going via way of Venezuela. Imagine instead that a terrorist cell took down the grid for a month. What do you suppose would be the most valuable thing you could trade in that event. I guarantee you it’s not money, unless it’s such an obscene amount it will bankrupt you.
The weirder this world gets, the more I truly hope that you’ve done the basics. Some water, some food, some tradable’s, ( think whisky,vodka,cigarettes,antibiotics, etc) Without some of those basics in place, you’re entire life is in the hand of someone else. Think about that for a minute.
If you don’t “have, grow or can catch” your own food, your life is dependent on a supply chain. What if it goes down, even for a couple weeks? I’m not here to scare you all, but we went through Hurricane Irma in 17. Money wasn’ t the solution to the immediate problem. Food, fuel, and electric, was in demand. I could have charged 20 bucks all day long, just so people could charge their phones. It didn’t matter that the cell towers were down.
Take five - ten percent of your “portfolio” and invest in some basics beyond “money”. I think it’s money well spent.