The Best Investments For 2021
Last week, I rented a quad bike (a.k.a an ATV) to drive around the Mexican countryside.
Because they have four wheels instead of two, my first reaction was to think they'd be safer, or more stable than regular motorcycles.
But as everyone in my entourage had no problem reminding me after I paid for it, the biggest danger with quads is their illusion of safety.
It turns out you're actually 50% more likely to die in an ATV accident than in a regular motorcycle accident. This has to do with how drivers perceive the vehicle to be stable - when it's not - which leads to reckless driving, and the enormous weight that falls on you if you tip over.
In short - quad bikes seem safe and stable. In reality, they are anything but.
This illusion of safety reminds me of...
Investing in January 2021.
Yes, the new year is around the corner, but not much has changed since 2020. The COVID pandemic is still raging strong, and two days ago, the Capitol was seized by a man in a Chewbacca costume wearing a Viking hat.
I am optimistic about the world, but in times like these, it's useful to point out a few illusions of safety to be mindful of:
The cash in your bank that earns 0% interest, and gets inflated away at 10-15% per year thanks to COVID-induced money printing...
And the bond in your pension plan which literally has no upside earns 0% interest and has 50-70% downside due to the wave of COVID-bankruptcies we're likely to see in the next 5 years...
Sorry to break it to you...but both, not safe anymore.
Remember, the world is changing, and you need to change with it.
My job is to make things easy for you. So here's what you need to know:
There's a lot more money printing coming. In fact, Joe Biden called the first wave of stimulus a "down payment" of what's to come.
The biggest winners of money printing are always people who own inflation-protected assets - like stocks, real estate, gold, and bitcoin.
The biggest losers are always people who own non-inflation-protected assets like cash or bonds.
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So, what assets should you own? Here are my favorite:
Bitcoin. You know I'm a fan. It crossed $41,000 today. You're still not late to the party. I personally also initiated a bigger position in Ethereum over the last couple of weeks (more on that next week).
Your own personal brand. Your ability to generate money anywhere in the world, at any time, using skills that are unique to you, and based on your curiosities and passions is a real superpower.
Videos I posted on social media over 3 months ago are still generating thousands of views per day, which directly translates into real income.
The next 5-10 years are going to see the explosion of solo-entrepreneurs who build 1-person, 8-figure businesses in the creator economy using social media.
Your brand is an asset. If you own equity in your own brand, there is virtually no limit on the upside.
Technology businesses that have strong network effects, pricing power, and high returns on capital.
I've talked about this before, and if you want to learn more about investing for the next decade, I recommend you read this and watch this.
Quote of the week: "If you want to be rewarded, you have to be irreplaceable. If you want to be irreplaceable, you have to be unique. To be unique, you have to be authentic. To be authentic, you have to stop listening to everyone else. It's drowning 'you' out."
Best long-form article I read: Peter Thiel's Religion. I mentioned Peter Thiel a few weeks ago. He's a fascinating billionaire, and this is a great deep-dive into his thinking.
Best Tweet I came across: More wisdom from the Master himself
Book I just purchased: The Beginning of Infinity
What I'm fascinated by: how simple investing is versus how complicated we make it seem.
Investing has nothing to do with reading charts, following daily price movements, reading the financial news, predicting what the central bank is going to do next week, or anything seemingly "complicated."
Scammers sell you on forex, "guaranteed 5% monthly returns with no risk" or whatever attractive money scheme they can easily wrap in a blanket of fancy marketing or authority speak (that makes you feel inadequate and excited, at the same time).
Bankers and wealth managers sell you with pie charts, risk profiles, "diversified portfolios", and fancy PDFs. And of course, they rely on the media to throw red and green numbers at you all day with sensationalist headlines that make your stomach turn.
But investing is simple. In fact, here's how you can get started investing in 3 easy steps:
Open a brokerage account like Interactive Brokers, Saxo, TD Ameritrade, or whatever works locally for you
Buy an index fund (e.g. of all stocks, all US stocks, all technology stocks, all the major cryptos, or whatever floats your boat)
Do nothing.
All you have to do next is sit on your ass for the next decades and not panic. You'll be beating 80% of professional fund managers in the process, and will automatically pick the winners of tomorrow (the beauty of the 'index approach').
Of course, you can make it more complex, and yes you can generate higher returns by choosing asset classes that historically perform better (like technology startups and cryptocurrencies). But this will get you started.
The golden goose of investing is compound growth - letting a high-quality asset grow exponentially in value over time. It's not sexy, it's not fun, but it works. Keep it simple.
Anything else I think you should know: The 75 Hard Challenge starts on January 12, so this is your last chance to join us in the group (just reply to this email). In case you missed the first emails, here's what the program entails:
For 75 days, you must:
Exercise twice a day, for 45 min each time, including one workout outside - no matter the weather
Drink no alcohol
Stick to one diet of your choosing, with no cheat meals whatsoever - none.
Drink a gallon of water
Read 10 pages of non-fiction
Take a progress picture
If you as much as eat an M&M or miss a workout, you have to start from Day 1 again. It's intense, yes - but if 2020 wasn't the trigger to do things differently, I don't know what will be.
Until next week,
Alex.