Where would you invest 150k now?
Fellow monkeys,
I am in a bit of a situation. Over the past years of my IB stint, I've saved up quite some money (for my standards) and never really had the chance to think about a sensible investment strategy (aside from MSCI World ETFs). Long story short: I quit my job earlier this month and am about to start my PE gig in July, leaving me with some time to think about my money.
Given the current market valuation combined with the possibility of rate increases and inflation - how would you invest a 150k now?
I know, the rational answer is to have 20k in emergency cash and park the rest in MSCI World + EM funds in combination with some gold or crypto.
However, the current market valuations (particularly in the US) make that decision just painfully hard. Even at a NTM P/E level, only the pre-dotcom bubble period provided for more expensive markets ...
How're you navigating through these conditions? How would you allocate 150k now? Would you go thematic / sector-specific (e.g. staples or energy) or look more into bond ETFs to hedge for inflation? Buy Berkshire and hope that Buffet lives for another 10Y?
I am mindful that there are numerous threads which look at asset allocation and deal with a roughly similar question.
However, the setup and circumstances are different with the consequences of the post-covid rebound (including inflation) looming around the corner.
Looking forward to your thoughts!
can you co-invest in ur PE firm?
Yep, that's on the list as well
What's ur fund's average investment IRR? 15%
I've been putting cash into emerging managers.
How do you evaluate them and allocate accordingly?
Asking cause I recently made my first hedge fund investment recently and it was an "emerging" manager: 2y old with <250m AUM, but shooting the lights out. My rationale was these are young guys, doing well and in the flow of deals, and they are super nimble, so it's a risk-on type allocation. No doubt I bought the top, but so far they're still up every month.
Looking for:
-Below market fees. Makes it way easier to outperform
-A thesis I understand.
-Low correlation to my primary source of income
-Lots of learning opportunities for me to take back to what we do + networking opps.
If you really want to avoid ETFs, you could put a portion in large cap tech (AMZN, FB in particular trade at fairly reasonable valuations and could even be more valuable if broken up by regulators) and the other in mature companies with nice FCF yields (e.g. CVS, MCK have high single digit FCF yields and should grow over time) and RE / banks for some potential inflation protection.
Plug power
EOD options contracts into penny stocks. No way it could go south
Interested
SPY
I know it's been said literally every single time and they were wrong and missed out, but I'm going to wait for the inevitable return to trend. Forget the valuations for a second. Pull up the SPY 50-year chart and draw a trendline through it. Every few years we eventually pull pack to around the trendline and currently we are wayyyy off that trendline. Call it astrology but there's just too much white space to the downside on the chart. If it doesn't pull back to the trendline soon that's fine. It just means 50 years of precedent have been beaten.
GameStop. 2/3 in shares and 1/3 otm calls dated 7/16 or later.
It seems you are concerned about inflation. Not sure that bond ETFs are a good hedge as real rates may (already have?) go negative if inflation spikes. Better to invest in gold streamers. There's a post in my history about this so I'll just copy paste it here. Other than that my portfolio is basically a mix of anything with scarcity - RE, crypto, commodities / producers (mostly precious metals, industrial metals, and uranium). There's a little energy too, but that has the least thought behind it.
FWIW, Merrill Edge offers BAML's research which might be a good place to start digging in. Obviously it's mostly larger names covered, which I try to avoid but I don't know of many other sources of free research like this.
"If you're looking for inflation plays, take a look at gold streamers like FNV and OR. These guys basically fund mine development in exchange for a royalty or cut of the production. Compared to the actual producers themselves (i.e. gold miners), you still get the asset price tailwinds (assuming you believe inflation is coming/here) but you don't get hit with input cost inflation too (gold miners need lots of materials to mine which will also rise with inflation; gold streamers' main costs are white collar labor which will not, at least not to the same degree)."
Thank you, very helpful! I'll look into the gold streaming bit!
Seconded on the gold streamers. I like WPM better than FNV and OR. OR is still exposed to development risk compared to FNV or WPM (hence the massive multiples discount for OR), and WPM is better valued than FNV (relatively speaking, again on multiples).
Thanks lemme take a look at WPM
OR got rid of a lot of their development exposure when they spun out ODV last year...now it's really just SSL with ownership of a large, development-stage project, and for that reason, they typically trade at a discount to the other senior royalty/stream companies.
Another one to look at would be Altius Minerals, which owns royalties and streams on a diverse portfolio of base metals. Copper typically performs well during inflationary periods and the macro thesis for Nickel as a battery metal is pretty strong. They also own 60% of their recent spin-out, Altius Renewable Royalties, which funds renewable energy projects.
Ethereum and polygon
^^^^^^^^
Seriously this guy gets it. Easy 3x+ this year, probably much more. This is the best advice in the thread.
this is the way
The speed of the transactions doesn't matter. Nobody will ever use Fantom or Polygon for transactions in a substantial manner. It doesn't have "room to grow." These aren't currencies. Non of these alternative coins will gain value long term relative to Bitcoin. Don't goof around. Just get Bitcoin and wait. If you want to get ETH because you think the platform will change the world then okay, but it is a longshot.
There is a common misconception in this industry that these "crypto currencies" are competing to be new currencies. False. The stable coins are the most likely to win the currency battle. Everything else is competing as an asset. These other coins aren't good assets. Bitcoin is.
No love for Cardano?
pltr and mnmd
Bond ETFs? Are you 80 years old?
haha
Thank you, very helpful. I was already thinking of having 10-20k in core tech values with strong fundamentals.
the answer is always the most unpopular, unmentioned option. and in this case it happens to be cash. DGAF about inflation, don't @ me
Cash is trash
Ok Ray
Bonds are one of the worst asset classes to hedge against inflation....FYI stocks are one of the best asset classes to protect against it (gold is lol and BTC not proven)
Stop trying to time the market, you'd going to be working for the next 40yrs. Find a couple nice global ETF / mutual funds and park it. Wouldn't recommend individual stocks unless you work FT in the industry
We could ride a bull market for years after this, do you want to be anxious 3-4yrs from now that you missed out on 30-40% upside? Who knows how long this all lasts...
Agree that it is a fool's errand to try to time the market so it's better to just buy and hold, with one big caveat. Even if you are investing in index funds and ETFs today, be mentally prepared for the probability that you are buying much closer to the top than the bottom. What are the implications of this? When you press the buy button be prepared to hold for an entire cycle, boom to bust to boom. This may be as short as ~1 year or as long as a decade.....so be prepared to hold for a decade. By all measures, the market is very frothy right now so chances are not negligible that this is pretty close to the cycle top. If your time horizon is until retirement, near-term market tops are irrelevant. If you have a 3-5 year investment horizon, the calculus may be different...
If you're buying ETF's with the hope to make money in <5 years, you're buying the wrong security
Thank you - that's exactly what's driving me nuts ... it's not overpaying by mere 20% or so but the fact that stocks are essentially trading at 22E multiples.
You are too late on crypto, make investments in other promising fields such as space exploration e.g. $MAXR
So false. Get Bitcoin and wait.
Bitcoin is nothing but a pile of crap that is being inflated from hype and conjecture.
I subscribe to Dan Wiener's The Independent Advisor for portfolio recommendations and loosely follow their growth model across my personal/retirement accounts. Sounds like this might be a fit since you're young and might have a long investment horizon. I'll say that I'm a believer in active management and look for the lowest cost, concentrated funds. Outside of that, I have a yolo crypto sleeve which is about 5% of my net worth.
Capital Opportunities - 34%
Dividend Growth - 25%
International Growth - 18%
Mid Caps - 13%
Health Care - 8%
Investment Grade - 2%
I hold cash and small % crypto. Unfathomable, I know right?
floating rate BDCs. come at me inflation.
I am overweight commodities (my not-so-proprietary thesis is that COVID recovery is the catalyst for the next supercycle) but that ship has sorta left the harbor. I think there's still money to be made but you aren't gonna see crazy 500% gains like Freeport McMoRan (Copper blue chip) has in the last 12 months.
Just gave exactly $150k to a small hedge fund.
I'm pretty risk-on at the moment so my next $100k is likely gonna go into defensive and boring shit like Canadian banks, maybe a Canadian REIT (Canada hasn't re-opened the same way the US has) and then perhaps some generic defensive ETFs
how much do you expect back from the HF? and what time horizon?
I was looking at a firm that gives "retail" investors access to various PE funds last week.
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