Besides random cryptos what do you guys invest in? I've been finding myself unintentionally diversifying out of equities.
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50% of NW in two (in my opinion home run) real estate development deals
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10% in an airbnb rental I'm working on
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40% stocks
Have been looking into online RE platforms and have been learning about stable coins yield farming (10-15% returns for cryptos pegged to USD - very intriguing to me but I know nothing about it). What are your thoughts on these? Anything else to be on the lookout for?
Stocks are probably the safest best bet in the long-run, but I love the upside of the RE deals and am drawn to the diversification benefits of the other assets.
Interested to hear opinion of thebrofessor
Don't have the net worth yet to meet my firms minimums but will may invest in direct pe/vc and certain hedge funds once given the opp
dont have any real estate and nor do my clients (besides individual properties) because the returns long term are inferior to equities
private equity irr is borderline criminal for LPs so unless it's a manager I know and trust like oaktree, no thanks
I like my liquidity and hedge funds are a mixed bag, time will tell if I go into alternatives
Thanks for the answer. I enjoy reading your perspectives on wealth mgmt.
By "besides individual properties" do you mean primary residences? Do you have any data for the long-run comparison vs equities, inclusive of leverage? Would love to see that. I don't necessarily doubt it, if we are talking about non-value add multi-family purchases. I have seen a few studies showing REITs tend to outperform the broader market.
can you expand on how private equity irr is criminal?
Not a clean mark to market. So the irr can be whatever their internal valuation equals. They won’t exactly open their books up to you to verify.
this, plus the fact that it while mathematically sound, it's only on capital deployed whereas the way investors review their actual performance is on the whole portfolio. I've seen funds with IRRs of >30 but a MOIC of <2x. at 30% net CAGR, your money should double in 3y, why has it not doubled over 5y if the IRR is that high? their answer is because some of the deals may have happened over a shorter time frame so the actual return could be low but if you annualize it it's higher, it's only on capital deployed, etc. if I owned a hedge fund like baupost that held 40% cash and they said their IRR was 30% but their actual portfolio return was like 18%, I'd have questions, but this practice is all too common in PE
the older I get, the more I believe PE is a vehicle to enrich the GP rather than the LP and most investors would do well to just stick with diversified low cost global equities
Not bro, but alternatives are not suitable for most folks. Traditional stocks and bonds are really all you need until you reach a point where you are an accredited investor.
ETFs that are long short, market neutral, or event driven are mediocre at best. I followed a few for a few years and was underwhelmed by the performance.
I am an accredited investor.
I don’t know that you can assess all the strategies you mentioned on an absolute return basis. Time period of assessment is also very important. I do feel like active management does have an edge in those types of strategies.
The broader point (that certain types of alternative etfs exist and may have some value) taken.
Beyond the active real estate deals (individuals properties), what online RE platforms have you been looking at? Something like Fundrise/Cadre?
Dipped my toes in this space but I am not knowledgeable by any means. Been looking at CrowdStreet. I preferred the fee structure when I was comparing a few of these. From what I've read, doing deep DD is difficult so you are relying heavily on the experience of the developer and the vetting of the platform. I like the idea of being able to throw $25k chunks into different deals/geographies. That said, you know that you're not getting nearly the returns as you would by investing directly into the deals.
oh yeah no question regarding the actual returns, but tbh I can't really think of any other ways that are easy to access. Syndicated deals would be ideal for a low effort/uncorrelated return if you're acting as a LP basically, but again you'd need to know people for that, which not everyone does. REITs have the downside that they correlate with general stock market returns a lot.
not to be a boomer but would be careful with stablecoin yield farming
Crypto.com offers 10% p.a. on USDC if I lock the tokens for 3 months, is there any risk apart from the platform getting hacked/killed by regulation/etc.?
100% real estate.
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Wow that’s interesting. What do you collect and what is your advantage?
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Can attest to this, collectibles can return significantly better than any traditional investment if you have any real of knowledge of them. In my experience Pokémon and sports cards are great, but have actually found limited edition sneakers to perform much better over a shorter time horizon. I know plenty of people who will make 50% coc over one year by investing in a certain sneaker they believe will go up in price. Of course, take this with a grain of salt because most boomers would lose all their money in the same time frame because this type of thing requires a much deeper understanding of the market than even collectible cards. Also consider that there are different sneakers to invest in for different risk appetites, some are more risky but return extremely well, others are safer and have a longer time horizon with lower returns, but either way, there is a significant premium compared to buying a vanguard fund. Definitely something to consider, but would most likely need some connections in the industry to make this work well.
50% RE. The sponsor I have been investing with has 24x'd his fund since 2012. All Phoenix multifamily. So $100,000 is now $2.4mm
Wow must be a hell of a developer. What’s his edge?
Being in Phoenix has helped a lot (multifamily is booming) and not charging any management fee, disposition fee, only a 1% acquisition fee, and then a 75/25 over the pref.
Where do you find your RE deals
Not sure if this was directed to me but one is a direct investment into a company asset and the other is through a family friend doing me a favor by letting me invest. The guy knows a few rich dudes and just calls them up when he has a good deal. The Airbnb I obviously did myself.
I invested 5k during my sophomore year of high school to trade in a very specific item-related hobby of mine on the aftermarket. 4 years later, with no new investment, I'm up to 20k of assets. Its a super niche space where people are willing to pay a premium for specific things and there are things you can just purchase and know that they will go up in value.
Would like to hear what it is you are speaking of.
Almost all of my savings in stablecoin staking. Cannot see a better risk return profile. These boomers chasing PE returns and high risk debt yields which are even lower than stablecoin yields lol.
10-12% on crypto.com for safer play
20% on anchor protocol which is relatively safe imo . Decentralised stablecoin
How do you assess risk of these platforms? In markets there is usually no such thing as a free lunch. No clue what is safe and what isn’t and how safe is safe.
Shit, 19.5% yield on Anchor is insane
I invest in cryptocurrency and buy Lunar Highway coins. The use of the currency is gaining momentum due to the large number of useful ways to implement it. The number of users who have linked their business with bitcoin is growing. The reputation of the digital currency reaches new heights, the trust of users grows as well. So I think it is a great investment. But you have to be careful to study all the nuances, which I watch regularly.
Scratcher lottery tickets
Uranium. 10x. Do research
I covered Cameco when I used to work in research. My knowledge is fuzzy at this point but I remember that success really hinged on China following through with its plans to construction a massive number of new plants. It had competing plans for solar and wind, so you had to have a good sense for which technology would ultimately "win" and which would get scrapped.
On the supply side, the largest producer by far is Kazakhstan, which operates under an SOE and may not act in a rational, profit-driven manner.
Investing in uranium without getting exposure to other metals is very tough. Cameco and a few others allow you to do this. With the stock up 3x in the past year or so, it's difficult to know what is baked in and what is not.
In investing you need to know how your view differs from the market. So what do you think you have a unique edge on that isn't already baked into the price?
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