If you thought socialism might be brought about by large, angry crowds with pitchforks, hellbent on redistributing your unearned wealth, you’re out of sync. There’s a much more acute danger of the majority of the world going socialist (well ok, state capitalist – it’s more flexible as it gives more leeway for crony shenanigans) by way of central monetary and fiscal authorities buying up an ever larger chunk of global assets.
All types of assets in the same asset class are not created equal. Although in general, markets tend to be more or less efficient (at least if you can wait by the river long enough), there are peculiarities in the efficiency. One of the most prominent of these peculiarities is the liquidity premium.
A little bit insight into what kind of asset classes i like and don’t like. Things to keep in mind:
- Safety of cash flows is paramount.
- Capital preservation is more important than capital growth.
- This is not other people’s money so messing up and moving on isn’t really an option. You have to get more right than wrong, constantly.
- My investment horizon is years to decades. The longer, the better. Liquidity for capital deployed is relatively unimportant, but money management is not.
- Something that doesn’t provide a relatively predictable cashflow while maintaining it’s value, is not really a possible investment instrument. At best, it’s a hedging instrument. At worst, it’s a zero sum game with me as the lemur in a room with 700-pound gorillas who are smarter than me.
- I operate in – and exclusively invest in – safe regions, where bureaucratic, tribal and warlord relations don’t affect property rights.