2021年3月31日星期三

I’d Rather Break Four Ribs Than Lose a Penny

Palm Beach Daily

I’d Rather Break Four Ribs Than Lose a Penny

By Nilus Mattive, analyst, Palm Beach Daily

My relationship with risk has always been a little strange.

I’ve raced open-wheel formula cars at triple-digit speeds…

Snowboarded down nearly-vertical mountain faces…

And surfed way overhead waves on desolate beaches in foreign countries.

Along the way, I’ve torn a knee ligament, broken a metatarsal, and had a surfboard go straight through my face and into my jawbone. In one particularly bad incident two years ago, I snapped four ribs and collapsed my lung.

But for some reason, the thought of losing a single penny has always scared me.

At least up until very recently.

I’ve finally come to embrace what Daily editor Teeka Tiwari calls “asymmetric risk.”

And the results have been just as thrilling as racing, snowboarding, or surfing.

I’ll give you a couple of examples in just a minute.

First…

How I Learned to Embrace Riskier Investments

When I first started buying stocks back in grade school, I picked blue-chip names like IBM and Disney and did quite well.

Then one day my broker pitched me on a little-known mining stock. I was a teenager and figured he knew what he was talking about…

Wrong.

I ended up losing the vast majority of my investment rather quickly. That experience taught me two things.

First, I would never blindly accept a Wall Street recommendation again. Second, losing money really hurt.

So from that point forward, I did my own research and always tried to avoid risk as much as possible.

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It’s why I mostly worked for old-school value investors and wrote about conservative wealth-building strategies when I started my career on Wall Street.

It’s also why, for all the years I’ve been publishing my own thoughts on investing, I’ve generally stuck to dividends and other income-generating investments… strategies that place the odds squarely in the investor’s favor (like selling options)… and loopholes that essentially create extra wealth with almost no risk at all.

Make no mistake: That’s still where I put the bulk of my attention (and my own money) right now.

At the same time, I’ve realized that risk is a tricky word.

It’s nearly impossible to get any type of investment return without some amount of risk.

Take money market funds…

Most investors consider them to be the same thing as cash because they are never supposed to vary from a $1 net asset value.

Yet during the financial crisis, the Reserve Primary Fund – a money market fund founded in 1970 with more than $62 billion in assets – did in fact “break the buck.” It was liquidated and returned $0.991 for every dollar invested.

And even if your money market fund maintains its net asset value…

What’s the risk of earning the current average annual yield of roughly 0.5% while the Federal Reserve aims to have inflation run four, six, or eight times higher than that?

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Meanwhile, what’s the risk of completely missing out on life-changing gains as an entirely new type of asset like bitcoin goes from $500 to $5,000 to $50,000?

Is there a way to split the difference while sleeping well at night?

The Concept of Asymmetric Risk

As I explained in another recent essay, I’m one of the many traditional finance people who DID completely miss out on bitcoin’s crazy ride from under $500 all the way past $50,000.

Not because I didn’t know about it… But because I just didn’t want to take a chance.

Yet during bitcoin’s meteoric rise, I drank at least a dozen $100+ bottles of wine.

Wouldn’t it have made a lot more sense to forgo a few of those bottles and plunk down the same amount on a single bitcoin at $500?

After all, the wine was gone the minute I drank it. At least the bitcoin had a chance of doing something a year or two down the line!

Enter Teeka’s concept of asymmetric risk – the idea of investing relatively small amounts of money into opportunities that have the chance of producing truly life-changing gains.

If you’re wrong on nine out of 10 investments, it’s not a big deal because you’re risking small amounts of money you can afford to lose.

And then if one out of 10 hits, you can easily make 10, 20, or 20,000 times your money.

All the while, you can still have the bulk of your investments in traditionally safer investments that earn steady returns and/or produce regular income.

This is where I’ve been going personally, even before teaming up with Teeka. In my case, I do my asymmetric investing in an old Roth IRA.

That account is worth a relatively small percentage of my overall investments – roughly 5% of the total.

And since it’s a Roth IRA, the money held in the account is tax-free until withdrawal… no matter how big it gets going forward.

So over the last year, I’ve roughly quadrupled the value of the account with just a few asymmetric plays, including a 1,072% booked gain on Tupperware (TUP) and a 309% booked gain on a very small mining company that I won’t name here (because I have now purchased a new round of shares after a substantial pullback).

In addition to that mining company, I currently have just a few other positions in the same account – like the Grayscale Bitcoin Trust (GBTC) shares that I purchased after my talk with Teeka, and some very out-of-the-money put options on Tesla (TSLA) that expire in January.

Not one single holding amounts to more than 11% of the Roth IRA account’s total value… Which means not one single position is worth more than 0.55% of my overall investable assets.

So if those things don’t work out, no biggie.

But I believe every one of those holdings has 10x potential going forward.

Just as an example: If Teeka’s $500,000 bitcoin forecast comes true, I’ll easily make 1,000% on my GBTC position – and that alone would double the total value of my Roth IRA.

If a couple holdings make similar returns, I could start to see a meaningful gain to my overall portfolio’s value.

And if I compound the results over a decade or two, it’s not hard to see my Roth IRA ultimately being worth more than the rest of my conservative holdings combined.

So that’s the power of asymmetric investing.

Turns out it’s just like my other hobbies – you take calculated risks and can end up getting the rides of a lifetime.

Best wishes,

Nilus Mattive signature

Nilus Mattive
Analyst, Palm Beach Daily

P.S. If you’re looking for the best asymmetric opportunity right now, consider this…

When Teeka first recommended bitcoin in 2016, its entire market cap was $6 billion… But just last month, its market cap hit as high as $1 trillion.

So Teeka’s early subscribers had the chance to book gains as high as 16,377% – enough to turn a small $500 investment into $82,385.

And while Teeka still believes we could see bitcoin go as high as $500,000 or more, there’s an even better asymmetric opportunity in front of us today.

It’s a crypto that Teeka expects will hit $1 trillion in value this year… And at 8 p.m. tonight, he’ll reveal its name to you for free.

It’s all happening at a special event called Crypto’s Next Trillion-Dollar Coin. And during the broadcast, Teeka will give you all the details on this asymmetric opportunity – including its name and ticker symbol.

Plus, he’ll tell you about six tiny coins Crypto’s Next-Trillion Dollar Coin will slingshot to the stratosphere.

(And in case you don’t already know, Teeka’s free picks have been sensational – with average peak gains of 883%.)

So click here to reserve your seat for tonight’s big event… There’s no risk to attend, and potentially thousands to lose if you sit this one out.


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