New Money: Re-mapping My HyperGrowth Portfolio
My portfolio which once was more like a Red Bull can, now also has a Bordeaux barrel besides it.
The Elevator: Curated inputs to elevate your business and expand your lifestyle.
Hey All,
Different type of Elevator post today. I want to talk about some mindset changes around investing and share some names that might be interesting to dig into depending on your goals. This is not financial advice and do your own research etc. etc..
Growth Mindset
In my founder mindset of 2013, I was all in on growth. This was from both a personal time investment perspective (Building DTS) and investing heavily in tech stocks. I actually bought my first Tesla stock back in 2013 and Facebook not long after that. I still remember my entry prices. I didn’t have the leverage or portfolio to turn that into something incredible, but my perspective was driven by seeking asymmetry and speed to growth. Naiivete and luck with the timing, and being long “Software is Eating the World.”
I remember having conversations with value investors much older than me about how much they hated Tesla. By 2017, I pushed further out the risk curve into Bitcoin and eventually long tail crypto. Even more hated, which I loved. I wrote about that then, and even have an email from 2013 that I wrote on Bitcoin (and of course I didn’t buy, big mistake!).
Mindset Shift
At 30, in 2020, we had COVID, and the world began to change. So did my preferences as an investor. COVID supply chain shocks had us come face to face with durability. I see September 11th, 2008, and 2020 as all traumas that change our collective psyche. Now, each major signposts point the way to how we’re reintegrating that trauma collectively. That integration means change, and we’re seeing that at every level of society.
Because of that, my mindset has shifted. Call it age, or simply seeing some of where the cards seem to be falling. At thirty-five, I feel the ups and downs of the rollercoaster more. Volatility is not the same thing as risk. But markets move, and adapting to that movement means understanding the timing of when to play trends and when to get on new paths that have yet to play out.
The question that once guided my portfolio… “How fast can this grow?” now feels incomplete. The better question has become: “How can I stay invested for the long run?”
I want to keep riding the longest possible time horizon and position myself for the next decade.
So, my portfolio which once was more like a Red Bull can, now also has a Bordeaux barrel besides it.
The New 60/40.
Jeff Park has a new take on the 60/40 worth reading more about. He says that stocks and bonds now rise and fall together, so bonds no longer cushion your equity risk. Essentially, it’s all one system and all one trade. The trick is to have assets outside of the system as part of your construction. You build resistance to the old system through investing in the new system. This mirror’s many other thinkers like Jeff Booth, and mirrors a centralized vs. decentralized world splinter that’s occurring.
Russel Napier is also worth reading and listening to. He nailed the inflationary regime change and he has argued that we are entering a period of financial repression in which governments will repatriate capital to focus on their own local market.
So I’m thinking more about global markets, about debt, leverage, and even value investing… who am I?!
FWIW current kindle read is here: Buffet & Munger Unscripted
What I’m doing is I’m Barbelling, between the “old world” and the “new world” and between risk on and what I can hold forever. I’m still very long risk, it’s now much more balanced on the other side. I even have a chunk of Gold, and in 2022 I went long Berkshire which has paid off well.
Never Selling
My biggest mistake and my biggest flaw as an investor is selling. I either sell too early, or just don’t know how to sell. I just don’t even know how to think about it. Then it dawned on me through listening to interviews with value investor Mohnish Pabrai that I simply never need to sell! This solves a major problem and has become somewhat of a revolution for me. Never selling accomplished multiple things for me at one time:
Performance improvements…
Remove taxes from the equation
Puts me on a longer time horizon
Trading less by removing half of the actions possible
Spending more time on choosing well up front.
Rely less on skill and more on luck (it’s less about picking right and more about duration of hold times).
Not holding too many names and over-diversifying.
No joke, I called my stockbroker platforms today and asked them if “Can you take the ‘sell’ button off of the platform for my account?”
Sadly, they don’t allow you to do this. I’m still looking for new ways to add friction to stash away investments. IRA’s work great for that, but your limited to your annual investment there. Selling, for me, has mostly been a mistake. Selling relates to market timing, and timing relates to trading.
A good deal of the benefits come from the change in pyschology. Of course, I’m not saying that I will never, ever sell. I’m saying that this is the default position to take.
Eventually, you can borrow against the portfolio to take on minimal leverage, or simply “trade” when you sell some assets to diversify into other investments. So those sales are less about thesis changes or market timing but about freeing up cash for an investment.
What goes in the Coffee Can?
Because I’m trying to resist EVER pressing the Sell button (except for lifestyle chips) I’m constructing more “Coffee Can Portfolios.”
From Chris Mayer,
“Think of an old coffee tin you’d slide under the bed to keep valuables safe.
A coffee-can portfolio works the same way for stocks:Pick a handful of exceptional businesses you’d be happy to own for a decade or more.
Buy them, “seal the can,” and walk away.
Do nothing—no tinkering, no trimming, no panic-selling—until the ten-year alarm rings.
By eliminating your own urges to trade, you give compounding time to work and avoid taxes, fees and emotion-driven mistakes. That’s the whole trick.”
I want to remove friction, choice, and “trading” from the equation.
So that’s what I’m looking for now. Names to put in a Coffee Can. I don’t know if I can think beyond 5 years from a particular investment thesis perspective, but it’s a start.
Read more about this from Chris Mayer.
One Pre-Made Coffee Can: WAGNX
One vehicle that I have been exploring for these types of investments: The Pabrai Wagons Fund. ($WAGNX). Launched in the autumn of 2023, the fund has spent its short existence underperforming. That’s what I like about it, the long opportunity for something that might still be undervalued.
The portfolio’s weighted price-to-earnings ratio hovers around 10, roughly a third of the S&P 500. Its holdings include airports, specialty lenders, and logistics firms in countries most investors still label “frontier.” Once again, this is no longer buy big tech and close your eyes.
I like the CIO Mohnish Pabrai, who was friends with Munger and Buffet. I’m dipping my toe in now and have listened to all of their investor calls.
More to come On “Personal Business Models…”
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Ok I’ll continue with another note in the future related to “Personal Business Models” and how that relates to investing.
If you found this interesting feel free to share any thoughts or views. I’m constantly researching investing opportunities and platforms so it’s always top of mind.
Be in touch,
Xx David