Alchanati Campbell & Associates
Who you are is who you are, markets are being a bit crazy, gold shines not as bright, REITs, your thinking and your time.
The most important skill nobody taught you. “All humanity’s problems stem from man’s inability to sit quietly in a room alone,”(Blaise Pascal). We fear the silence of existence, we dread boredom and instead, we choose aimless distraction. We will never be able to learn the art of solitude. We now live in a world where we’re connected to everything except ourselves. Never being alone is not the same thing as never feeling alone and the less comfortable you are with solitude, the more likely it is that you won’t know yourself. We are increasingly out of touch with who we are and we are really addicted to a state of not-being-bored. But there is a solution: the only way to avoid being ruined by this fear is to face it. Let the boredom take you where it wants so you can deal with whatever is really going on with your sense of self.
REITs. Interest rates and yields on Treasury bills are what tend to drive REIT prices and that’s what’s behind their recent rally. REITs have out performed other US equities since late February.
REITs versus Private Real Estate Assets. From 1992-2017, a list of 7,300 private funds in Cambridge Associates’ database (an extensive collection of institutional-quality private funds) were tracked. The return from the 25 year period was 7.6% while the FTSE NAREIT REIT All Equity Index (a public REITs Index) had a return of 10.9% during that same time period. Investing privately gives you the privilege of investing with the greatest institutional managers, but you sacrifice the daily liquidity available with public REITs. Private real estate investments not only earned a lower return, but also took on much greater risk in the form of higher leverage.
Private Banking versus Wealth Management. Many don’t know the difference. Wealth management deals with the optimization of a client’s portfolio taking into account their plans and goals and this can be practiced on a portfolio of any size. Private banking refers to an envelope solution for high net-worth individuals offering personalized care and management of their finances.
How to improve your thinking. Understand the forces at play and understand how your subconscious might be leading you astray. Here is an effective framework for thinking that protects us when making decisions:
The most important asset… time. I would be willing to bet that none of you, if you were offered every dollar of Warren Buffett’s fortune, would trade places with him right now and I would also bet that Warren Buffett would trade to be 20 years old again for all of his wealth. Why is time your most important asset? Because you will never get a second more than what you already have. Money will come and go in your life, many times as a result of good and bad luck, but your time is only here now.
Gold. The price of the precious metal dropped to its lowest since last July. A stronger dollar and higher short-term bond rates are blamed for gold's recent decline. Since gold is traded in dollars, a stronger greenback makes it more costly to buy this precious metal. Also with the expectations of the higher interest rate hikes from the Federal Reserve, investors are buying up higher-yielding assets.
Markets are being a bit schizophrenic. US economic growth is accelerating and corporate profits are booming, but geopolitical risks, inflationary pressures and escalating trade tensions threaten the market’s outlook. A majority of investors worldwide believe a trade war is the greatest risk facing markets and the worst part is, it’s largely dependent on the actions of unpredictable politicians.
The Alchanati Campbell and Associates Team
WHAT'S UP FRIDAY? is a weekly newsletter that will give you a summary of "What's up?" on Wall Street, in the US and around the World written by The Alchanati Campbell and Associates Team. What makes us unique is we focus on long-term knowledge; knowledge that will still be useful to you 10 years from now.