It’s that time of year again where I review my current investments and take a moment to philosophize about the future of investing. I’m a fundamental believer in this statement: “There is no HARVEST if you do not INVEST.”
Without putting seed in the ground, a farmer cannot expect a harvest later. Even if you are not a farmer, the same is true for you! If you do not invest money, you have no hope of achieving a financial harvest later. In May, I will have been an active investor for 21 consecutive years. For the first six years of this journey, I invested exclusively into market-based investments. Since that time, I have diversified into real estate and small business along with a dabbling in precious metals. It has worked well for me.
Full Disclosure: I am not a certified financial planner, nor do I sell investments, insurance products, or other similar financial products. My goal in sharing this information is to shed light on a topic that very few people understand well. It is my hope that this information will help inspire more people to climb the I Was Broke. Now I’m Not. Ladder (download a free copy HERE) and become investors so they can live fully funded lives.
One of the most common questions we receive here at I Was Broke. Now I’m Not. is: “What investments do you recommend?”
My answer is always, “I don’t recommend specific investments. I can only tell you the investments I own, and they have worked well for me. The investments you choose are up to you.”
Below is a chart of my current investments – click on the chart itself to download a printable version.
Yet another year has passed, and you will see that I have continued to actively trade stocks. I have sold several individual stocks while deepening my investment into other stocks. Overall, my investment strategy has continued on a straight-forward path of maintaining a balanced portfolio with approximately 35% real estate, 30% small business, 25% stock market and 10% cash.
My views of the investing market place:
- Stock Market Strength There has been significant earnings growth which has supported a substantial increase in company valuations. One key measure to track is the “P/E Ratio” – Price-to-Earnings. This is the ratio between share price and the earnings per share. Currently the DJIA is priced at 21.12 times earnings, this is not sustainable. One of two things will happen: earnings will indeed grow or share prices will drop. My belief is that a combination of the two will happen. Earnings will indeed grow while share prices moderate to achieve a more reasonable P/E. (Side Note: My weighted balance P/E Ratio for my individual stock investments is a more acceptable 15.39)
- Speculation Mark Twain once famously stated: “OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks in. The other are July, January, September, April, November, May, March, June, December, August, and February.” Rather humorous and spot on for short-term investors. This is why the majority of my investments are being held for the very long term. Notice that my individual stock investments only comprise 3.74% of my overall net worth.
- Deals will be found – but they will have to be looked for! A lot of the great and easy investment choices are gone from the market. Real estate prices have recovered. Businesses are doing well. Precious metals have stabilized. Finding a great investment opportunities will require diligence and focus.
- The wildcard: Tax Reform Who knows where potential tax reform will take us?! Some investments made attractive due to special tax advantages could fall out of favor with investors if they sense that those tax advantages are in jeopardy.
I welcome your thoughts on the investing market place as well. What do you think? What are your strategies?
Read previous installments of Joe Sangl’s “Current Investments” posts HERE.