Under the Surface with Vern and Ryan

Friday, 15 May 2020
Melbourne, Australia
By James Woodburn

Today I’m joined by two editors that, on the surface, have two diametrically opposed views on the market.

And in some respects, they do…

If you tuned in last week, you’ll know Ryan Dinse’s expertise is in identifying and speculating on early-stage companies at the forefront of exponential trends.

Vern Gowdie, on the other hand, focuses primarily on wealth conservation and protection. In his words, he is much more concerned about the return OF his capital, as opposed to a return ON his capital.

But, as you’ll learn in our conversation below, they’re actually more similar than many might realise.

And it was for this reason that I wanted to get Ryan and Vern together on a call.

The idea stemmed from an email we received from Insider reader Adrian a couple of weeks back:

Here’s an excerpt (emphasis mine):

Yes, stock prices are too high, many more people and businesses to go down, this recovery will take years, I think.


I need, we need, financial advice. I’ll rather pay for that rather than lists of shares to buy and watch.

I subscribe to Exponential Stock Investor, Australian Small-Caps and Crisis & Opportunity and I am also working, still working!

I am sitting on lots of cash now.

When do I get back in and buy…which ones? You guys have a lot of knowledge and understanding of the markets. Experience too.

I have invested a little into (PTM) Platinum Asset Management with a stop loss in place.

I like it, it’s easy. Are there other funds similar to Warren Buffett’s Berkshire here in Australia?

…I must be Mr average amongst your subscribers. With not quite enough financial knowledge. Paying for tailer-made financial advice is too costly and not (maybe) cost affective.

Now, there are quite a few things to address and talk about here, and I must admit we didn’t get to every question asked as the conversation took its own course…

But it seemed to me that there’s a common overarching problem identified that many people are seeking an answer to.

So, that’s what we started with…

Check it out here:



James Woodburn: Hi, Woody here for the Insider, and today I’m joined by two of our really experienced editors, Vern, editor of The Rum Rebellion daily e-letter and the paid service, The Gowdie Letter, and the very recently launched VIP service, The Gowdie Advisory.
James: And then we also have Money Morning’s Ryan Dinse, editor of the Exponential Stock Investor service and the premium services, Extreme Crypto Trader and the Billion Dollar Breakout Trader. So welcome, guys. Thanks for joining me.
Ryan Dinse: Great.
James: Now, on the surface, it kind of looks like we have two diametrically opposed viewpoints to the markets between you guys and I guess, in some respects we do. If you tuned in last week, you’ll know that Ryan’s bag is zeroing in on exponential trends, one of which are the developments in the world of Bitcoin and blockchain. Vern on the other hand has a much bigger focus right now on wealth conservation and protection.
James: I think the key takeaway from our talk a couple of weeks ago, Vern, can be summed up quite simply, really, and that is you’re much more concerned about the return of your capital as opposed to the return on your capital. But on the other hand, you’re also actually more similar than many people might realise. And that’s something I wanted to touch on and get to in just a moment.
James: But first, I really would like to read an interesting reader email, which I think may speak volumes for what many readers are probably feeling and experiencing right now, and hopefully, you guys will have some answers. So the idea for this conversation was really inspired by this email from an Insider reader called Adrian. So I’m just going to read it out loud so that we know what it’s all about.
James: ‘Stock prices are too high. Many more people in businesses are to go down. This recovery will take years,’ that’s what he’s sure of. ‘I need, we need financial advice. I’d rather pay for that than lists of shares to buy and watch. I subscribe to Exponential Stock Investor, nod to Ryan there. Australian Small-Cap Investigator and Greg’s service, Crisis & Opportunity, and I’m also still working.’
James: ‘I am now sitting on cash, but when do I get back in and buy and which shares? You guys have a lot of knowledge and understanding of the markets and experience too. I have invested a little into a pretty well known fund, Platinum with a stop-loss in place. I like it because it’s easy. There are other funds similar to Warren Buffett’s Berkshire. Are there other funds similar to Warren Buffett’s Berkshire here in Australia? I have cashed up rental property and cash flow rental property with debt too. How should I best structure that?’
James: ‘I must be Mr Average amongst your subscribers with not quite enough financial knowledge. Paying for tailor made financial advice is simply too costly and not maybe cost effective.’
James: Now, there are quite a few things to address and talk about here, and I thought we could get both of your takes on some of the questions for everyone’s benefit, but it seems to me there’s a common overarching problem that many people are seeking an answer to, and that is a big dissatisfaction with mainstream investment advice. And this is where I guess your similarity comes in, and I’d like to get both of your perspectives.
James: Vern, you ran your own very successful financial planning business for many years, and Ryan, I know this is your background too. And you have some thoughts on this as well. So where do you think this dissatisfaction stems from? Vern, should we start with you?
Vern Gowdie: Thanks, Woody. It’s a long question. I think the royal commission kind of touched on that, the worst part of the industry, that dissatisfaction is that the model has this inherent conflict of interest, or there was because of the institutional ownership of the majority of planners or planning groups. They had a finger in a lot of pies to drive funds into their institutional products. So there’s that conflict of interest.
Vern: And the other thing is, the industry is not called funds management for nothing. They have to manage funds, and it’s from that, that there’s a clip of a ticket in various percentages that flow back to the parties within that chain, be it the advisor, be it the institutional owner, be it the dealer group. So there’s an inherent drive towards product, and that’s good while product is working, that particular product in that [inaudible 00:04:38]. Are we still there?
Ryan: Yeah.
James: We lost you for a moment.
Vern: Yeah, because it’s cutting out, this Zoom. So that’s good while a particular…but then, there’s, as I said, this need for product all the time, and to bring it to market, and I think people are a little bit wary of that conflict now. There’s been enough data over time and people have had enough experiences to feel a little bit wary about the advice.
Vern: And don’t forget, not a lot of institutions or planners really saw what we were seeing. This debt build up, the instability in the system. It was a coattail ride for the industry because markets were going up and products were performing and balance funds were doing what they were doing, but underneath it all, in my opinion, the stability was leading to instability. And so the industry didn’t pick it. And now we’re going that chapter’s closed, we’re going into a vastly different environment, and we’ll touch on that shortly.
Vern: And how are you going to navigate your way through it, if at the back end of all this it’s about product rather than genuine advice? How are people going to be led through this successfully? It’s going to be a real challenge for the industry and for, I see, the clients of those planners who are using the traditional balance type approach. It’s not going to work in the environment we’re going into, in my opinion.
James: Yeah. What do you think, Ryan? I mean, Vern kind of came out of this industry, I think that the rounds on or about at the same time you were going into it, and you come to the same-
Ryan: Yeah. I think he was on the way out, I was on the way in about in 2007, I got into it. So…
Vern: Yeah, I was selling.
Ryan: You were selling [crosstalk 00:06:26].
Vern: Yeah, what a baptism of fire, mate.
Ryan: Steve did a GFC, would you believe? So yeah, great timing from my perspective. But look, yeah, I suppose coming in from that perspective, I’d caught the tail end of a bull market and it was exciting times and I really love the industry itself. Look, my experience of financial advice is that most planners actually, 99% of the time are trying to do the right thing by their clients.
Ryan: The problem they’ve got, like you said, is the system within in which they work in, it constrains them. And for a long time, like you said, that was product. At the end of each piece of advice was a product. And that was the way the system was set up. Then later on, post the GFC, the regulatory hurdles became immense and of course, regulation can have good things to it as well, and there was the 1% of issues that arise with financial advice. But the problem with the regulations now is that many advisors are scared to do anything different, to stick their head above the parapet and suggest for example, like Vern has, that things are building up to crash.
Ryan: Even if you thought that as an advisor these days, you couldn’t say that because, one, you don’t want to stand out from industry because that’s bad for business. Secondly, from a regulatory point of view, you would have to justify that in your notes. And that is a lot of work, to try and justify that kind of thing to one client, is a very hard thing to be able to do.
Ryan: So the incentives for the mainstream financial advice industry have coalesced around a one-size-fits-all approach, because it’s just a lot easier as a business to run it that way. If the whole market goes down, well look, everyone else is in the same boat, so, oh well. And if the market goes up, everyone’s happy and paying fees and that seems to be the approach.
Ryan: So to receive independent viewpoints, or different viewpoints, is very hard in the mainstream advice, and that’s just the way the system seems to evolve. And that’s part of the reason I got out of it seven years later. It was very hard to use your own brain.
Ryan: The second point I would make, which is a more philosophical level, is that everyone thinks differently. Each client you see as a financial advisor thinks differently. But like I said, the model is designed as a one-size-fits-all approach. So it’s like the person has to fit the advice, rather than advice fit the person. I sort of came to the conclusion in the world of advice that the best person to manage their own financial strategy was the person themselves. That doesn’t mean there’s not a lot of value that can be added from having good advisors.
Ryan: For example, I’ll give you a very brief example, but let’s say someone had some free cash flow and was thinking whether to put more into the super and claim a tax deduction or to pay off their mortgage quicker. Now, a good advisor could weigh up the pros and cons of that approach pretty well and explain to someone in a easy to understand way on what are the pros and cons of each approach. But ultimately, it’s up to that person to decide which approach to take. And the financial advice industry presumes there’s a right answer out of that. And there’s not really, because the future’s inherently unknowable and it will depend on the individual person’s perspective on things as well.
Ryan: So I think that’s the missing part in the advice world is that there are many shades of grey and the individual perspectives aren’t taken into account. And I think that’s what a lot of people are crying out for. They want knowledge and they want to understand what are the possibilities, but ultimately, they want to be able to make the decision for themselves.
James: You would agree with that right, Vern?
Vern: I would agree without a bias, yes. Here’s the advice, again, it may or may not prove to be accurate, but if it’s delivered with good intent, good logic and there’s a rationale behind it and saying, ‘OK, this is what I would do.’
Vern: So the way I approach always approach it is, what would I be telling a family member? So if it was an older person, what would I be telling my dad, or my brothers or sisters or my children, the advice? And that may or may not involve a product, but at the end of the day, it should be a product that is going to suit their needs, rather than have some sort of benefit to the person recommending that.
Vern: So the only truly independent model you can have is where you operate on an hourly fee basis as an advisor. You say, ‘Come on in’, like an accountant or a solicitor and say, ‘OK, I’ll do that work. And here’s a bill for $500,000’, or whatever it is to seek that advice, and then for someone to go away and do that. But that’s not how the model works.
Ryan: And that model is generally…there are some fee for service advisors, but it’s generally too expensive for the average person to access unless you’ve got-
Vern: Well, too expensive on an upfront, just to get a bill, but they don’t realise what’s the real cost.
Ryan: Yeah. The value for money might be there of course, but the upfront cost sometimes it’s just prohibitive for people [crosstalk 00:11:35].
Vern: Well, that’s the advisory practice now. Honestly, I’d have to be charging five, six, $700 an hour for the advice, to make it worthwhile to be there. Now, again, as you say, people would balk at that. And then if you tell them to just go away and put their money in the bank, because I think there’s a big storm coming, they go, ‘I just paid that guy 1,000 bucks to put my money in the bank. What a waste of money that was.’ So again, the perceived value won’t be seen until after the event.
James: But it’s funny you say that Vern, because it links into the conversation we were having before we hit record. So the first part of Adrian’s question was, when do I get back in and buy, right?
Vern: OK.
James: Now, and that kind of chimes with…we all know what your advice is right now, and that is to stay on the sidelines. So perhaps, we can explore that side of the conversation a bit more. So…
Vern: Yeah. I’ll share the screen here. It was part of a video I did for founding members on Tuesday about some very good charts I got there, and I’ll get into that. But having said that, when do you go in and buy? That’s going to be an unknown. You’ve just got to work your way through it. But I’ll just say why I think there’s more headwinds coming rather than tailwinds. And I’ll go into that in a minute. But I have recommended in The Gowdie Letter that people book short in this market via…
Vern: So I’ll just share this screen. So this might go some ways to answering Adrian’s question, because cause people are chafing at the bit. Markets are back up. What should I do? Have I missed the boat? Well, I’ll just go into this. I’ll just share this screen. This is a chart I got the other day and again, bare with me with this. This blue line here, and I’ll just get my little…this blue line is the M2, money supply in the US. So you can see it, it follows up. And then it takes a big turn north there with the creation of more money from the fed.
Vern: The black line is actually the S&P 500. And the red line is actually the correlation. It’s the R2, it’s the correlation between money supply and the S&P 500, the advancement of the S&P 500. So it’s 0.95, which one is perfect. So 0.95 is very, very tightly correlated. But you can see here, there’s a divergence. Money supply has gone up now, but the S&P has gone down. And in theory, if that correlation was to hold true, the S&P should be heading towards something like 4,000 points, whereas currently it’s about 2,800 points. There’s been this divergence come through.
Vern: And so what people are expecting is the money supply, this relationship will continue, and we will see the S&P follow up the money supply. However, we’ve seen this movie before, and it was in Japan in the 1980s, again, a very similar chart, money supply, the Bank of Japan increasing the money supply. The TOPIX, which is the Tokyo stock exchange, stock index I should say, again, very closely correlated with the money supply. And in that time, there was a 0.96 correlation. So again, a very, very tight correlation.
Vern: But then came the moment when that bubble burst and money supply kept going about the TOPIX, the Japanese share market went into a fall and went into a funk for the best part of 20 years. It lost about 80 something percent over the next 20 years. And the reason why, is you can have this money creation phenomena going for some time and driving up, but at the end of the day, it all comes back to earnings. You can’t get away from the fact that companies are valued on a multiple of earnings, and those earnings are driven by consumers. And so if we have a look at this next…
Vern: OK, so this chart is actually, these are the consumers. So if you look back here, employment, that’s the dip in unemployment or the unemployed during the ’08, ’09 recession, the GFC. That was the downturn. Then the percentage of new jobs ticked along. This is the current downturn compared to what happened in 2008, 2009. Anyone who thinks we had…
Vern: That was, Obama said, the greatest economic setback since the depression. So if that caused that, what do people think this is going to cause? And then to put that into perspective, this goes on and looks at all previous recessions in the US since post-war, and they’re all colour coded here, the amount, the job losses and the time to recover those losses.
Vern: This one here was the ’07 or the ’08 GFC. It took something like 18 months to get back. So what’s that? Six, seven years to get back? Where do we go from here? How many years are we going to take to get those job losses back? They are not coming back any time soon, if ever. So there’s your consumer. There’s your future earnings, is in that chart. There’s going to be a contraction and those earnings will fall, and that will then filter through into markets.
Vern: You’ve got to wait for all that to happen. We’re just at the start of this, and it’s just not going to get cured overnight. There’s going to be no V-shape recovery, it’s going to be a very down and a very, very, very long…it’s going to be an L on its side.
James: What do you think to that, Ryan? I know this is where you kind of arrived at your points via the same background, but you’ve probably come to a different conclusion, I would’ve thought, right?
Ryan: Look, in a weird way, I don’t disagree with anything that Vern says. I suppose, and this is the point about how everyone looks at things in an individual way, where Vern sees a crisis. I completely see that as well. From the macroeconomic side of things, things are looking pretty dark, but I look at things in terms of collision points. These are moments in time when big changes occur. And from these collision points in history, huge opportunities arise as well, and that comes through the process of change.
Ryan: So the services that I run are obviously more on speculative and…Exponential Stock Investor trading service. But I don’t think I’ve ever said to anyone, and I actually made this point pretty clear in my services, the services I run, you should only have as much in that part of your portfolio as suits your personality. So it could be very, very small amounts.
Ryan: And I always think there’s a place in anyone’s portfolio, even a conservative person, even if it’s a small part, to think about how the world’s going to change and how it’s going to look in the future. And I think a lot of those changes are driven by technology, and right now I’m seeing huge opportunities in certain sectors, but it’s not the broad economy by any means. There’s parts to the economy that will do disastrously, But there’s parts like med-tech, like biotech, like 5G infrastructure. There’s huge opportunities. I mean, we’re on a Zoom call right now via the company Zoom-
James: Or trying to be on one.
Ryan: Trying to be on one, yeah. And they had 10 million daily average users in December. And I think I read a month ago, they now have 200 million daily active users. So what my process of thinking about markets maybe looks at the same data as Vern, but what I try and do is I try to think, what emerges from the flux of the change? And obviously, then I’m looking for the possibility of asymmetric returns.
Ryan: So I’m looking for things with huge upside, with the realisation that I could very well be wrong, and they could go to zero. That’s the risk I take in my services, and that’s why I always try and tell people to make sure that whatever they’re allocating to my services fits in with that understanding.
Ryan: So, yeah, I don’t see me, or Vern, as being opposed in any way. We look at the same data. We just then process it in a different way and look for a different [crosstalk 00:19:55].
Vern: I couldn’t agree more, Ryan. I have more of a macro view, you have a micro view. And again, out of this, and this is a paper, I was just reading, a research paper from the University of Chicago’s economic division today. It was just done a few days ago. And again, there’s going to be change out of all this, and there’s going to be some amazing change, like whenever you go through this.
Vern: You look at the disruption to the oil crisis in the ’70s, that was a boon for companies like Toyota and Honda, the small car-makers as opposed to the big car-makers. So there’s always going to be winners and losers out of this change. And you delve into that, I don’t have the time, desire or I just don’t have the inclination. So I’m just a big picture sort of guy, so I just think, OK if the index looks like value, I’ll buy and I can go and play golf or go swimming, whatever I want to do without having to dig down into the [inaudible 00:20:50] of the market to find those little gems.
Ryan: Look, and I love having…one of the benefits of working here is you get access to that big picture thinking as well. So you don’t know the big picture when you look at the micro and you try and fit the micro into the big picture as well. So for example, with Exponential Stock Investor, I think we held off on issuing a recommendation in April, just because we thought the market was due a pullback, and we’ve actually got a triple header recommendation we’re just sitting on right now, but we’re just waiting for a little bit of the timing because the market volatility is so great that timing is a little bit more important now, even if you don’t need to get it absolutely correct with the type of trends I’m looking at, but if you can get it 40% cheaper tomorrow than you could yesterday, well, why not?
Ryan: So I think any investor, and it comes back to what we’re talking about, about advice is, you can get different perspectives, and then you get big picture stuff, you can get individual stock analysis, you can get trading advice. Your own financial strategy should try and piece all that together in a way that suits you personally. And I think that’s how I think of advice evolving.
Ryan: I think we talked about this, Woody, recently, the concept of maybe the advice in the future will be like, you have a circle of advisors that you trust that you can tap into, maybe that’ll be one model. Maybe another model will be robo-advice where it’s just all computer generated for someone that wants to have nothing to do with an adult. So maybe there’ll be layers of advice that people can tap into. I think that’s the way it’s going to go, personally.
Vern: Yeah, I think the traditional or the planning model that I started within the mid-’80s, ’86, I can see that was going to die out, and I think if the level of disruption I think is coming there, the economic dislocation’s coming and what that’s going to do to performance, which is one of the key selling features of that model, I think a lot of them are just going to go too hard, and [crosstalk 00:22:50].
Ryan: Yeah. Commonwealth Bank have just sold their wealth management division, Colonial to a US private equity firm and KKR. So it will be interesting to see how the US, which is probably ahead in terms of using technology in financial advice, it’d be interesting to see how they come in and take the huge funds under management that Colonial First State has and how they’re going to design the advice model of the future.
Ryan: My take, and I’ve been talking about this a lot in Exponential Stock Investor as part of The Great Bank Unbundling’, is that I think the banks will get out of financial advice now. I think it’s too risky for them, the regulatory risks too much, and now that the business model doesn’t work, they can’t do the product led business model.
Vern: The market won’t be there, mate.
Ryan: Yeah. So I think that’s a trend that’s happening as a consequence of all this as well.
James: But I think that’s being timed with…I’m just seeing an awful lot of readers that are writing it. And there’s a clear trend of, I alluded to at the start, just complete dissatisfaction as well with what’s happening, and people are seeking answers outside of the mainstream form or bubble of advice, and where do they go? And I guess maybe that’s the key. Ryan and I were discussing, we always like to give a takeaway for these conversations. And maybe we can steer towards the end of the call on that. Well, how do you develop a wealth creation strategy or plan for your financial future in such uncertain times, but not just in the market, but with where the mainstream planning industry is headed as well?
Vern: Well, that’s the reason why…it was because of that demand or that dissatisfaction is coming there and the level of inquiry I was getting from readers of The Gowdie Letter and through Rum Rebellion was why we looked at the launch of The Gowdie Advisory service, which just takes things to another level. It’s sort of a virtual advisory type approach, but we look at it across a whole range of areas. It’s just the wealth management, the asset protection, estate planning, family wealth. I know Bill Bonner’s going to be contributing in that area as well.
Vern: So it’s a broader range, because people have got a lot of questions to ask about and to get some direction. And so, that was the real genesis for launching that service. It’s done, and it’s going well, we’re finding the rhythm with it and we’re getting together. And I’ve got a good group of advisors, people who I’ve trusted over the years and reaching out to some of the institutions to tap into some of their research that I value.
Vern: So yeah, it’s just to give people an even greater insight into how I think they can manage their personal affairs and take that control, because it’s about control, for me, because you put your money into some of these products and you have no idea what’s inside and where the time bombs are. So to me, it’s about, transparency is very critical and having control of your own capital.
James: Ryan, what about you?
Ryan: Yeah, no, I’d agree 100% with what Vern said. A lot of the time we get fixated on the investment returns and what you invest in, but a proper wealth creation strategy or financial strategy is more than that. And I think that’s the good thing about Vern’s advisory. He touches on a lot more than the investments. He talks about, well, how can you invest, the products you can use.
Ryan: And the other thing that will come out of all this change as well is the government, they’re already talking about making huge changes to tax rules and stuff like that. That’s going to flow into superannuation and that’s going to flow into superannuation strategies, and people are still hungry for how that’s going to work. Some people might be implementing a strategy now, which might not make sense in a few months, if the government changes certain rules or certain tax rules. And having a place where they can get independent, unbiased advice on that is good.
Ryan: The thing that Vern was saying about the product is particularly interesting as well. We were just talking off camera before, about how there’s two different gold ETFs and one gets a tax advantage, and one doesn’t. How would you ever know that, unless someone…because the people that sell products have generally got a vested interest, so they’re not going to tell you. And then Vern’s just uncovered the difference between certain gold ETFs that one has a CGT benefit, a capital gains tax benefit, and one doesn’t. And over time, in this low return environment, if you can eke out as many tax benefits and return as you can, that kind of stuff is gold.
Ryan: So I think the way to think about the financial advice process or the wealth creation process is it’s a big picture thing. It involves strategy, it involves products, it involves asset allocation and it involves psychology as well. There’s a whole bunch of things that go into it, so it is a big thing. And the more good advice you can get, the better, but that’s the key, isn’t it? Trying to find people that you actually trust to give you that good advice is sort of [crosstalk 00:28:03].
Vern: Yeah. I’m a huge fan of self-managed super funds. I know they’ve lost a little bit of flavour of the month type stuff of late, but I think they’ll come back, especially where we’ve looked at this potential gating of, or delay in switching between say balanced and [inaudible 00:28:21] where people are looking to get out.
Vern: So you’ve lost that control again. Whereas with my self-managed super fund, I don’t worry about it being guided. I know where those assets are. I can move them freely amongst it and things like if you want to buy precious metals, you can do that in your self managed super fund. Or if you want to buy the BetaShares, Bayer or BBOZ fund, you can-
Ryan: Or bitcoin, Vern.
Vern: Bitcoin, yes. If you want to, if you’ve got one of those wallets in mind. But you just have that little bit more flexibility to do that and to manage the tax situation. I’m over 60, so it’s all tax-free. It’s just brilliant, the earnings. And I agree with Ryan, there’s probably going to be change coming there and we’ve seen those limits put on the amount you can move into account-based pensions.
Vern: But yeah, having that control, I think is going to be hugely important. And not everyone wants that, but for those who do, it’s important, there’s a service that says, hey, I’ve got access to superannuation, self-managed superannuation specialist who can come in and we can interview them and talk about it and people can ask them questions. I think that’s going to be hugely important, because a lot of people are scared off by it, they think, ‘Oh’, but it’s not that hard if you want to take control, if you want to have personal management over your affairs.
James: No, I think that’s a clear trend and a clear want for our readers as well. So anyway, I think that’s a good place to end. Thanks for your time, guys. You mentioned your new service, Vern. We’re going to have some details for everyone about that next week, hopefully.
James: But I guess that the key takeaway also that there’s, there’s really two kinds of profitability, isn’t there? There’s one that’s more money in your wallet. Of course, we all want that, but the second goes a little bit deeper and it’s about learning how to take control of yourself and using what’s between our ears really, to learn as much as we can and get access to great minds and with great ideas.
James: And I guess that’s really what we hope to do as we develop The Insider each week too. So thanks for your contribution, guys. And thanks for tuning in if you’re listening in. Cheers.
Ryan: Cheers, everybody.
Vern: Thanks Woody, thanks Ryan.
Ryan: Yeah, see you, Vern.

At the end I asked Ryan and Vern for their thoughts on how to go about developing a wealth creation strategy or plan for your financial future in these uncertain times.

After we finished the call, Ryan sent me an email to add to what he said.

The main point he’d like people to contemplate about when they’re working out their own strategy is to think about their asset allocation process first and foremost.

That is, what percentage of their portfolio they devote to cash, bonds, shares, property, and possibly alternate assets (like art, collectibles, or even bitcoin).

Ryan’s rule of thumb is, your asset allocation is what helps you pass the ‘sleep at night test’.

And by doing this in a way that suits your own thinking and circumstances, you can also have some money at play in the kinds of ideas he talks about in his services: Stocks invested in big trends that have huge long-term potential.

That will give your overall portfolio possibilities as well as protection.

I’d like finish with a couple of emails Greg received this week from his Crisis & Opportunity readers.

Hi Greg, I have been a subscriber of your newsletter for many years and love your work. As I run our own SMSF I would like to ask you that when you recommend a stock to consider letting us know if it is a small, medium or large cap and if it is a speculative play. This would be beneficial in deciding how much to invest.

As you have lot of knowledge it would also be helpful to recommend a allocation of portfolio value. This would help guide those with little trading experience in better allocating their funds and reducing risk on speculative plays.

In the end this is just your opinion but it’s an educated one which helps all the members who don’t have time to do the research.

And then this…

I’m a relatively recent subscriber to C&O but loving the considered and balanced approach you take to stock selection. One thing I would value is some form of indication on how best to balance risks in the portfolio. Maybe a ‘risk’ rating next to each stock or even a suggested percentage allocation. Is this something you’d be willing to consider?

My conversation with Ryan and Vern, and then these notes got Greg and I talking this morning about publishing some more detailed portfolio allocation suggestions in The Insider.

I mean, you might subscribe to one or a number of our advisories. And of course you may subscribe to others from other research businesses…or do your own selections. Or do a mixture of all of the above.

Perhaps more discussion on how to best allocate different recommendations and assets classes would be helpful?

Let us know here: letters@portphillipinsider.com.au.


PS: By the way, for those of you who didn’t catch last week’s roundtable with Ryan, Sam and Lachlann, do check it out. In honour of the bitcoin halvening, I decided to create a ‘two for one’ deal on Ryan and Sam’s excellent research services, Exponential Stock Investor and Secret Crypto Network. I’m now thinking about when to wrap that offer up, so if you haven’t taken it up yet, here’s your chance