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The next Warren Buffett is a woman. Here's how to invest with her.
Happy Friday everyone!
Last weekend, Warren Buffett released his annual letter to shareholders.
If you haven’t taken note of anything I’ve written before, I hope you’ll take note of this.
Here’s what he said (and I quote):
“Fixed-income investors worldwide – whether pension funds, insurance companies or retirees – face a bleak future.”
In certain large and important countries, such as Germany and Japan, investors earn a negative return on trillions of dollars of sovereign debt.
Bonds are not the place to be these days.”
Here’s what that means for you:
Government bonds, traditionally considered “safe investments for retirement” will, in fact, get you no retirement at all.
The idea that you can own a “safe asset” that earns 6% per year to retire on no longer exists.
So what do you do instead?
Well, Warren has us covered here too (I quote):
“The best results occur at companies that require minimal assets to conduct high-margin businesses – and offer goods or services that will expand their sales volume with only minor needs for additional capital.”
This asset-light model is the hallmark of technology businesses.
Remember, software businesses earn on average 25% on equity every year. Non-software businesses earn just 7% annually.
New economy > old economy.
Warren’s echoing a simple message that bears repeating: in 2021, to safeguard your money, you have to take risks.
So next time a friend tells you they own “bonds for safety in retirement” - slap them. With that, retirement is not happening.
If your financial advisor, wealth manager, or banker buys you bonds for “stability” - fire them.
And if you’re counting on a government pension plan (many of which are invested mostly in bonds) to retire - I’d urge you to start taking your retirement into your own hands.
You don’t have to listen to me - but I hope you’ll listen to uncle Warren.
Speaking of - the “next Warren Buffett" could be a woman. Here’s how to invest with her:
Her name is Cathie Wood and she has made a name for herself by returning over 40% per year for the past 10 years - and 150% in the last year alone.
Unsurprisingly, she invests in technology and innovation (see the theme here?).
She runs a company called Ark Invest and is notable for being an early, outspoken supporter of Tesla.
To be fair, she’s a total bad-ass.
You can invest in her main fund under the ticker ARKK in your brokerage account. It owns companies like Square, Tesla, Roku, Spotify, Zillow - and many more.
Go check it out if you’ve been investing in bonds and the old economy - and need to spice up your returns.
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By the way, if you’re not buying stocks today because:
you’re waiting for the market to crash next week so you can invest
“experts” say stocks are overvalued or
the market is at an all-time high
Then don’t just slap your friend investing in bonds - slap yourself too.
Look, the market is supposed to reach a new all-time high often. That’s how it works.
I know people who’ve been saying the market’s overvalued for half a decade - and missed out on massive gains.
Don’t fall for those who tell you to “wait to buy stocks because they’re expensive now so buy gold instead, etc.” - and all that other stuff.
Nobody can predict what’s going to happen tomorrow. So don’t try.
It won’t be the last time you hear this but - time in the market is more important than timing the market.
Invest regularly, no matter what happens on a day-to-day basis, in good times as in bad.
In the long-term, you’ll be massively rewarded.
And if you’re not going to buy stocks when they go down - like this week - then when the hell are you going to buy?
In the meantime, ignore the media, ignore the news, and ignore the naysayers.
Best article I read this week: If you want more examples of investors switching to technology & innovation, and crushing it, read this.
Best Tweet I came across this week: Read this and you’ll understand more about Bitcoin than 80% of people.
(I’ve also been completely obsessed with this album for the last week. It’s on repeat as I’m writing this.)
Anything else I think you should know:
Just look at this picture:
So is it time to sell your stocks?
I don’t care if the stock market goes down 40% next week. And you shouldn’t either.
You have to learn to live with volatility and uncertainty. They’re part of generating high returns.
As Peter Lynch, who returned 30% per year for 13 years would say - “the key to making money in stocks is not to get scared out of them.”
Invest in companies and innovations that make our life better, cheaper, faster, more efficient, more convenient, and more creative (like Cathie does)
Invest regularly - ignoring all the doomsday noise from the media, friends, news, bankers, reports, etc. - hell, you can even ignore me if it helps!
Sit back, relax, turn off the news and go do something else with your life
Speaking of enjoying life, next week, I’ll share with you the best investment I ever made that I recommend to virtually everyone who asks.
I know you didn’t ask, but I’ll tell you anyway.
It has (almost) nothing to do with investing & money. But it’s changed my life and I use it daily.
And it’s just $200.