May 21, 2010
Quad Cities, IA, USA
It’s been a lovely few days here in America’s heartland… I’ve been able to catch up with some of my friends, but to be honest with you, I’m aching to get back on a plane and get out here.
I’ve decided to wait it out for another 2-weeks; there is an Atlas 400 gathering in New York City on June 4th, and a lot of my friends have committed to attending. One member is traveling from as far as the Philippines to attend, so I’d really like to be there.
Immediately after the Atlas event, though, I’m going to hop on a plane with my business partner and a few other members for Panama, then Brazil, then Europe.
I’ll tell you more about what I have planned for that trip later. For now, let’s move on to this week’s questions.
Leading off, Kyle writes, “Simon- I would first like to thank you for your letter; it is a very good way to start my day. Question: I am a 20 year old male who is soon joining the US military. Given my small budget, what do you recommend I do to protect my assets?”
I get this question a lot, and it’s great that you’re thinking in the right direction. However, with limited assets, you really don’t have any assets to protect. Instead, if I were in your soon to be well-polished boots, I would focus on four things:
First, the military has a way of taking young people at an impressionable age and teaching them how to excel within a bureaucracy… not to mention the military can also inculcate groupthink. I’m speaking from experience.
This may be good for unit discipline, but it’s terrible for the mind of a free man. I would strongly encourage you, during your service, to focus on keeping your mind free and creative– read as much as possible, ask questions, and understand that the military microcosm is not the real world.
Second, as you will not have much time or availability to build financial assets during your time in service, you should focus on building up your most important asset– yourself.
This means developing skills. Learn as much as possible– a foreign language or two, a technical trade, medical training, etc. These are subjects which are easy to pursue in the military. On the side, I would also be reading about sales and marketing– generating revenue is always a valuable skill.
Third, I would focus on cultivating an international mindset. Try to get stationed overseas, and immerse yourself in the culture. If you unfortunately end up deployed to the Middle East, make the most of it by interacting with the locals as much as allowed and learning the language.
Fourth, be smart with your money. The military makes it easy to save– they provide a roof over your head and food on the table, so save as much of your salary as you can so that you have a sizeable pool of capital by the time you are finished.
Next, Rick asks, “Simon, I get your Notes from the Field every day. Do you have any premium services available that I can subscribe to?”
I enjoy writing a free, daily publication… but I recognize that there is a lot more information that I can provide that goes beyond the scope of this short blog.
Not to mention, there is a lot of information that I would like to provide that I am simply unwilling to publish in this forum. My trusted contacts around the world don’t want their contact info posted online, and I don’t want the most sensitive information to be indexed and archived by Google.
Matt and I have come to the conclusion that the best way to provide the most comprehensive and sensitive information to subscribers is to launch an additional premium service. I’ll give you more details at a later date when I can dedicate more space to the topic. I need to move on for now.
Peter writes, “Hi Simon, earlier this week you said that you are closing out almost all of your speculative positions. Does that mean you are holding on to your non-speculative positions? What type of investments are those?”
For me, my nonspeculative positions are anything where I simply don’t care about the investment return. Physical gold is one such example– it doesn’t matter to me whether the price of gold rises or falls, the value of my coins remains the same to me.
Another example is private stakes in non-public companies, of which I own a few; I made these investments to generate long term profits and enterprise value, not to speculate on the immediate appreciation of share price.
Real property that I hold for its yield, or because it has personal benefit (an escape pad) is also a nonspeculative position.
When I say ‘speculative position,’ I’m referring to instruments in the public markets (stocks, currency, etc.) that I purchase or sell short because I’m speculating on a rise or fall in the asset price.
These are the positions that I’ve closed– there is way too much government intervention in the marketplace right now, and whenever that happens, there are always gross misallocations of private capital that wreck havoc on asset prices.
To be clear, this includes the long gold/short euro position that we closed on Tuesday at 1,003 euro, booking a 35% gain.