Image by Mark Herpel

Oh . . . decisions, decisions, decisions! As an investor, you have a multitude of options from which to choose on where you may deploy your capital. Should you be in Real Estate, Paper/Stocks, or Commodities? When is the right time to invest? What are the tax implications? What tactic should you incorporate into your strategy to get your portfolio up and running?

Full Disclosure: I do not like to lose on any investment I make, nor have I met anyone that does! Had to get that out of the way. My disclaimer should not be misconstrued into believing that I am risk averse. Risk averse is when an investor is not willing to invest due to the volatility, inexperience, or fear of loss in an investment. Notice I did not use the word risk in my definition. Let’s break this down a little further shall we?

Remember: Risk is not knowing something, doing it, and expecting great results. An investment may have a historical track record of violently going up and down, but that does not suffice for being called risky. That is the definition of volatility. Within volatility, great gains can be made and lost. Within my portfolio, I recognize the speculative and volatile nature involved in my holdings. My courage and conviction are from my study and understanding Cycles. Cycles provide an investor the opportunity to discern what is under and over valued. When volatility lowers the price of a position I hold or want to hold for no fundamental reason other than the bipolar antics of Mr. Market that is known as a blessing.

Let’s consider that we have 3 baskets from which to place your capital goods. The 3 baskets consist of Real Estate, Paper/Stocks, and Commodities. But how does one determine which of the 3 is under and over valued? Historically, Real Estate and Paper/Stocks tend to follow the same pattern in valuation juxtapose to Commodities. So you may want to consider being in 2 out of 3 for diversification. But aren’t mutual funds diversified?  Negative, mutual funds fall under 1 out of the 3 baskets which are paper/stocks. Diversification is being in 2 or 3 out of the 3.

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