Published on Dec 08, 2019 in How I'm Invested
Last update: Dec 13, 2019
The largest change in my investment strategy over the last month has been a push into crypto. I think that next year crypto could take off and I’m bullish on crypto as an asset class in the long term.
I personally believe crypto has spurred a technological shift analogous to the internet back in the 90s. It might take a decade for the full value to become evident, but I do think we’ll get there, which is why I’ve upped my crypto portfolio allocation.
*This list doesn’t include equity I own in private companies since it’s hard to value (and nearly 100% illiquid)
I’ve built up a large cash position over the last two years. Normally, I like to be more fully invested, but it’s been hard to find investments that will clear my 20% annual return hurdle rate. We are saving a good amount of money each month, so it’s difficult to find good investments to put new savings into, let alone the cash that’s sitting idle. I have a money market account with a private bank that’s paying me 2% APY.
I love the micro-cap space. The source of alpha is the fact that the companies are too illiquid to be traded by institutional investors. Micro-caps have also historically grown faster than the market. I’ve gotten ~30% annual returns in this space and hope for that to continue.
This is a combination of index funds (which I only own because there’s no other choice through my 401k) and illiquid international value plays. Again, the illiquidity is the source of alpha. I set my target return for this category around 20%. Most of it is managed by two value investors who I trust and have a strong track record of generating alpha.
You gotta live somewhere. Luckily we live in Boulder, CO, so we’ve seen decent price appreciation over the last five years and are comfortably above water.
Multi-family real estate is one of my favorite investment classes and I’m continuing to grow my position here. They average about 25-30% compounded annual return when you take into account tax advantages. I also like to have them in my portfolio because in recessions, demand for lower-cost rentals usually goes up. All of the investments I do are in the B/C class (not premium/luxery A), so in theory they might actually be negatively correlated with the broader market.
I bought these mostly at the start of 2019 because I thought interest rates would top out, which they did. I might add more if rates rise again. These are also likely negatively correlated with the economy, so in a recession their value should go up (as bond yields go down). I only make 2.5-3% return on these, but it’s better than cash.
Another negatively correlated investment. This is a portfolio of life insurance policies. Pretty morbid investment class, but once I learned about how the system works and how it’s beneficial for both the seller and the buyer, I got over it enough to invest.
My newest holding that went from an experimental project to a full asset class in my portfolio in the last month. I’ll continue to invest throughout the next year.
Two friends and I are trying to beat vegas. This season is a bit of an experiment as we’re tuning our strategy. So far, we’re up quite a bit, but we haven’t done it long enough to know if it’s luck + variance or if we’re actually making predictions at high enough accuracy to dependably win over the long term.