Passive vs. Aggressive Investing
Oh boy. I started writing this article and then stopped to add in this warning first. This is one of those articles where I really have to remind you that I’m not a qualified investment advisor and I don’t consider myself an investment expert. I’m just a guy who has done a lot of research and has, so far at least, made some good calls with my investing. Always do your own, independent research on this stuff, and talk to a qualified financial planner if you have any detailed questions. Okay? Okay.
As many of you already know, throughout most of my investing life, my only real goal has been to simply NOT LOSE MONEY. That was always my only objective. I never had any objective regarding how much money I would make. I had desires, but no real set goals; I just didn’t want to lose the money I had invested.
I have been successful in this. I have literally never lost money in my portfolio in my entire life. That includes times when everyone else I know was losing their asses, such as the dot com crash and the recessions of 2000-01 and 2008. I have never had a negative return on any investment I’ve made if you look at time frames longer than a calendar year.
The flip side of this is that I’ve rarely made a strong return. Many years I make just 5% or 6% on my money. There were a few years I made just 2%. I think in my best year ever I made 13%, and that was very unusual. (This is excluding when I was flipping real estate in the 90’s and early 2000’s; I made a lot more than 13% back then, but that wasn’t what I consider “investing,” since that took real work.)
This was okay with me, and still is. As long as I never lose money, I win. One could argue that in the very low 2% years (which were rare, but happened), I really was losing money because my rate of return was below the rate of inflation. Fair enough. Regardless, I’m very good at not losing money. I think I’m the best person I personally know at doing this, including men who are older than me and have much higher net worths than I do. These guys lose money, freak out, and get angry or depressed about it all the damn time. I never do; literally never. As always, my objective is long-term consistent happiness, rather than making a lot of money in my investments a few years in a row only to see 40-70% of it vanish in less than a year because of some economic downturn or crash.
About a year or two ago, I started shifting my thinking slightly. Now in my mid-40’s, I’m just a few years away from age 53, where I’m shifting my Mission away from earning money and will be focusing on working for the joy of working, rather than how much money I make. At that point, my focus will shift away from making money to managing money.
I want to be fully prepared for when I hit this point in my life, so as of about a year and a half ago, I started managing my money more aggressively. In the last 18 months or so, I’ve had a much more hands-on approach to my investments, becoming an active investor rather than the mostly passive investor I’ve been my whole life.
I’ve done things such as:
- Done more research on investments that have growth opportunity over the next few years.
- Done more research on investments that will do well when the economy is poor, or when the stock market crashes, or when Europe finally goes under, and other negative events as the West approaches collapse.
- Taken advantage, as best I’m able, of sudden shocking, unexpected events, such as Brexit and the election of Tantrum Trump.
- Being more active in moving money around within my portfolios to and from various investments, rather than just letting the money sit here.
- Shifted a larger percentage of my investments to more speculative investments rather than real investments. (Though the majority of my portfolio is still in safe, boring stuff like cash, and will remain so. I still don’t want to lose money.)
- And so on.
My results so far? In the last 12 months, my portfolio has earned 37%. And that’s with a pretty diversified portfolio.
Quite a big difference from the 5-6% years I’m accustomed to.
Do I expect to make 37% every year? Of course not. The last 12 months is just one year, and it’s very possible to get lucky in one year. Regardless, to say I’m optimistic about my financial investing future is an understatement. I honestly would be happy, hell, very happy, at an average return of 8-10% over a prolonged period of many years. If I can push that average to something like 15-20%, I’m going to be one happy bastard.
2017 is only about halfway done, so we’ll see how I’ve done for the entire year in January. Then I’ll compare my portfolio results in 2018 and 2019. If I can pull huge returns like this three years in a row, then I will officially declare myself as onto something. But that’s a good two years away.
Regardless, so far, so good.
And no, before you ask, per my usual policy, I’m not going to tell you exactly what I’ve invested in (other than very general statements), so don’t bother asking. Again, I don’t consider myself an expert in this area (yet!) so if I were to give specific investment advice, I think I’d be doing you a disservice. And there’s also the thing about not talking about my finances publicly. I covered the basic list of what I’m doing above; for those of you with assets, I recommend the same. If after 2019 I’m able to maintain these kinds of great returns, at that time I will consider being more public about specifically what I’m doing, via paid ebooks and whatnot.