Put your BUY orders in for Berkshire Hathaway

The material provided on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. I am not in any way a licensed anything and some people think I am a bit of a dolt.

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While there are numerous news headlines telling you that Warren Buffett has lost his touch and you should abandon Berkshire Hathaway (BRK), I feel investors should do the opposite.

This is the time to be buying BRK while it has been beaten down to the tune of around 17% over the last year and over 25% these past few months. It is a conglomerate worth owning that does not pay a dividend and has a proven positive track record lasting decades. Whether one has $1,000, $100,000 or $10,000,000 to invest, it should be directed to BRK over the next five months so long as one does not need a dividend and is seeking capital appreciation over the long term (ten or more years).

BRK comes in two versions; the “A” shares and the baby “B” shares and they mostly trade in concert with one another. Most Americans will buy the $170 +/- BRK.b shares which trade an average of eight million shares daily. But if you are able, purchase the BRK.a shares which are at around $250,000/share, and trade a little over 400 shares daily. This is a long-term stock, one to own for your retirement and potentially hand down to your beneficiaries when you pass.

It is my opinion, one should dollar-cost-average this stock over the next five months. So, as an example, if you plan to put $10,000 into BRK.b, buy either $2,000 worth each month or even better: buy around $500 each and every week for the next five months. Your future self will thank you.

BTW, here is a link to my most recent permanent portfolio update.

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My COVID beard has gone a bit too far; time to get out the razor!

June 2019 permanent portfolio update

Here we are with another update of the Permanent Portfolio and it has been performing well. Overall, it has increased in value of 159% with an annualized return of 27.47% (inclusive of dividends). During the same time frame, the DOW has increased in value by 50.7% and the S&P has increased by 39.6%. The relatively small original investment in Bitcoin (3%) has taken over a disproportionate percentage (41.1%) of the portfolio due to its dramatic rise over time. The portfolio’s worst performers have been investing in the Swiss Franc (a loss of almost 9%) and silver (a loss of over 6%). Besides Bitcoin, the best performers in the portfolio are NVR (108%), PayPal (over 213%), and the New Zeland Dollar (over 51%).

As said in the intro, this portfolio is designed to remain static (no trading) while also keeping one’s tax bill and fees to the lowest levels. I feel it would have been prudent to have trimmed the Bitcoin investment so it didn’t “take over” the portfolio with its wild swings. But we’re in for the long haul on this one, so it will be interesting to see its progression. Next update will be on the four-year mark – August 21, 2019.

See the portfolio page here.

Three Year Update to Permanent Portfolio

So, although the portfolio is doing well overall, I almost feel like Warren Buffett during the late 90s runup of tech stocks. The portfolio has taken a hit over the last six months, while the overall market is running on all cylinders. NVR and Bitcoin are notable hits and the overall portfolio wiped out 50% of gains over the last six months. It is still up over 125% since I posted it three years ago which is an average of over 42% per year. That sounds great, but the original 3% of funds to buy Bitcoin messes with the numbers a bit as it has now grown to be 37% of the portfolio. Not that that is bad, as it was originally a speculative investment, but in the real world I would have sold off a large chunk of it. The four main contributors to the growth of the portfolio have been PYPL, Bitcoin, VSMAX, and NVR. As well, there have only been two securities which have turned in a loss, and those losses are tiny (around $5,000 of a $1 million portfolio). This portfolio is meant to be truly static so Bitcoin will remain whether it goes to zero or to $500k a piece. The portfolio has not fully been tested and for that we will need to wait over time and/or a serious challenge to the traditional markets, not just a correction.

See here: https://karldickey.wordpress.com/karl-dickey-investment-portfolio/

Karl’s Permanent Portfolio – 2 year update

So it has now been exactly two years since I made my version of the Permanent Portfolio public and it has outpaced the DOW and the S&P. The net return has been 79.4% while the DOW has had a return of 31.9% and the S&P 23.2% during the same time period. And, for the naysayers regarding my small investment in Bitcoin for the portfolio then one would have to say the same about NVR and PYPL, etc. But if one was to remove Bitcoin from the mix completely, the investment would have been within a point of the DOW’s return without any of the risks in holding just 30 equity stocks or a single ETF for the DOW. This portfolio is eclectic, to say the least, but is designed to weather some heavy financial storms as well. It also has a minimum 10-year horizon, so at two years, it is still in its infancy.

See the full page here: https://karldickey.wordpress.com/karl-dickey-investment-portfolio/

ffs_money1_myspace

 

Tony Robbins’ new book is out this morning. Get this book!

It has been 20 years since Tony Robbins has released a book and this morning, 11/18/2014, is the debut of his new book “MONEY Master the Game: 7 Simple Steps to Financial Freedom.

robbins money book

Tony Robbins' new book is out this morning. Get this book!

It has been 20 years since Tony Robbins has released a book and this morning, 11/18/2014, is the debut of his new book “MONEY Master the Game: 7 Simple Steps to Financial Freedom.

robbins money book

You need Tony Robbins’ new book MONEY Master the Game: 7 Simple Steps to Financial Freedom

You need this new book by Tony Robbins – MONEY Master the Game: 7 Simple Steps to Financial Freedom. Although I am not much of a fan when promoters use words like “secrets to wealth”, this book is excellent! Pre-order NOW!

robbins money book

You need Tony Robbins' new book MONEY Master the Game: 7 Simple Steps to Financial Freedom

You need this new book by Tony Robbins – MONEY Master the Game: 7 Simple Steps to Financial Freedom. Although I am not much of a fan when promoters use words like “secrets to wealth”, this book is excellent! Pre-order NOW!

robbins money book

Jim Rogers: Forget U.S. markets, I’m buying Chinese and Russian stocks

With the Dow and S&P 500 at all-time highs, Jim Rogers, famed investor and author of Street Smarts: Adventures on the Road and in the Markets, tells The Daily Ticker he is staying far away from U.S. stocks and looking for opportunities in markets that are beaten-up. In the accompanying video, he talks about why he likes China (down 65% from all-time highs) and Russia (“probably the second-most hated stock market in the world” after Argentina).

Looking at the big picture, this week’s optimism about capital market reforms in China seemed to encourage investors and outweigh any concern stemming from the referendum on independence held in two regions of Ukraine.

Read the rest of the story here.

Karl’s Permanent Portfolio / Net Worth Allocation

dollar-gold-money

This is a combined asset allocation model culminated from Harry Browne, Tony Robbins, Jim Rogers and my own experience. I have excluded most specifics with relation to my personal situation and generalized the plan for the general public. This, in my opinion, is a balanced and safe approach to managing one’s net worth. I am NOT a financial adviser and if you consider anything from below, you should consult with a tax adviser, investment adviser and/or your attorney to see if it is right for you.

UPDATE: I have created a permanent investment portfolio at this link.

Definitions:

  1. Financial Security: the amount of money that covers food, housing, cars, travel, and basic entertainment.
  2. Financial Independence: where one doesn’t have to work and everything is covered.
  3. Financial Freedom: where one doesn’t have to work and EVERYTHING ONE CAN THINK OF is covered.

There are essentially FOUR “Buckets” where you will have your net worth. Your Security Bucket, Growth Bucket, Dream Bucket, and your Maintenance Budget. More on the buckets in a bit.

MUSTS:

  • Build 24 months of cash reserve in your security bucket
  • Have durable Power of Attorney
  • Have a Will & Living Will & Advanced Medical Directive complete, signed & accessible
  • Have a decent amount of life insurance to cover expenses should you die (if needed)
  • Have enough medical insurance to cover your needs
  • Have Auto, Home & Insurance plus an umbrella liability policy
  • Sign up w/ Legal Shield and/or have excellent legal representation & consult a good tax advisor

Example of what to do with your extra income and money received unexpectedly: $1,000 received – put $500 in Security Bucket, $250 in the growth bucket, $185 in the maintenance budget, $65 in the dream bucket. Spend less than you earn and you will have money left over for this plan. Skip the $12 martini and the $6 latte and put that money to work for you the rest of your life.
Reinvest all dividends, profits & non-earned income from the following buckets & distribute the income equally to each bucket.

50% of Assets go into your Security Bucket
This is the place where you put money into investments that are secure by their nature. They won’t give you huge compounded return, but if you do it long enough, even if the initial return is small, in the long run that compounded return grows and is kept secure. Your first investments MUST be put into your security bucket. These assets are either owned Joint Tenants in the Entirety if married, or in another secure, asset protection vehicle such as a trust.

12% of Security Bucket – CASH (equivalent to 24 month’s expenses, though some may only want to have 6 months reserve)

  • 20% New Zealand Dollars
  • 20% Singapore Dollars
  • 20% Swiss Franc
  • 20% U.S. Dollars kept in a money market account OR physically in a secure location
  • 20% Bitcoin (annonymous, secure, portable)

20% of Security Bucket – Your personal home

15% of Security Bucket – Life Insurance (and make certain you have HSA health insurance covered as well)

48% of Security Budget into your IRA / SEP / Tax Free Retirement Vehicle(s)

5% Fixed Income Investments: Corporate Bonds, other taxable but high yielding investments

90% Rest in Misc. Investments: Real Estate (REIT or direct), BRK.a or BRK.b

25% of Assets go into your Growth Bucket
These assets should be held in an LLC or other asset protected (privacy) vehicle

  • 10% of Growth Bucket goes into an Aggressive Growth Mutual Fund(s)
  • 20% of Growth Bucket goes into Real Estate – Direct Investment into commercial, residential or land (if not enough money available, then a REIT)
  • 45% of Growth Bucket goes into Collectibles: 10% of the 45% in Art / 90% of the 45% in Gold/Silver via Scrap-Coins-Bullion (kept in secure location)
  • 25% of Growth Bucket is your own small business (reap the tax benefits while increasing its value and enjoying its income)

6.5% of Assets go into your Dream Bucket

These assets can be anything from cars, boats, planes, etc. This is literally your dream bucket when you put money aside to buy or you already own the toys in your life.

18.5% of Assets go into your Maintenance Budget/Bucket
This is your maintenance bucket which is to pay ALL of your expenses during the year for when you do not work or for when you retire. If you are retired, then this is the bucket which must generate enough income for you to live. This needs to generate income (preferably tax-free) to pay up to at least $X per year in expenses such as food, property taxes, travel, etc, etc.

Karl's Permanent Portfolio / Net Worth Allocation

dollar-gold-money

This is a combined asset allocation model culminated from Harry Browne, Tony Robbins, Jim Rogers and my own experience. I have excluded most specifics with relation to my personal situation and generalized the plan for the general public. This, in my opinion, is a balanced and safe approach to managing one’s net worth. I am NOT a financial adviser and if you consider anything from below, you should consult with a tax adviser, investment adviser and/or your attorney to see if it is right for you.

Definitions:

  1. Financial Security: the amount of money that covers food, housing, cars, travel, and basic entertainment.
  2. Financial Independence: where one doesn’t have to work and everything is covered.
  3. Financial Freedom: where one doesn’t have to work and EVERYTHING ONE CAN THINK OF is covered.

MUSTS:

  • Build 24 months of cash reserve in your security bucket
  • Have durable Power of Attorney
  • Have will & living will & Advanced Medical Directive complete, signed & accessible
  • Have a decent amount of life insurance to cover expenses should you die (if needed)
  • Have enough medical insurance to cover your needs
  • Have Auto, Home & Insurance plus an umbrella liability policy
  • Sign up w/ Legal Shield and/or have excellent legal representation & consult a good tax advisor

Example of what to do with your extra income and money received unexpectedly: $1,000 received – put $500 in Security Bucket, $250 in the growth bucket, $185 in the maintenance budget, $65 in the dream bucket. Spend less than you earn and you will have money left over for this plan. Skip the $12 martini and the $6 latte and put that money to work for you the rest of your life.
Reinvest all dividends, profits & non-earned income from the following buckets & distribute the income equally to each bucket.

50% of Assets go into your Security Bucket
This is the place where you put money into investments that are secure by their nature. They won’t give you huge compounded return, but if you do it long enough, even if the initial return is small, in the long run that compounded return grows and is kept secure. Your first investments MUST be put into your security bucket. These assets are either owned Joint Tenants in the Entirety if married, or in another secure, asset protection vehicle such as a trust.

12% of Security Bucket – CASH (equivalent to 24 month’s expenses, though some may only want to have 6 months reserve)

  • 20% New Zealand Dollars
  • 20% Singapore Dollars
  • 20% Swiss Franc
  • 20% U.S. Dollars kept in a money market account OR physically in a secure location
  • 20% Bitcoin (annonymous, secure, portable)

20% of Security Bucket – Your personal home

5% of Security Bucket – Life Insurance (and make certain you have HSA health insurance covered as well)

63% of Security Budget into your IRA / SEP / Tax Free Retirement Vehicle(s)

  • 10% Fixed Income Investments: Corporate Bonds, other taxable but high yielding investments
  • 90% Rest in Misc. Investments: Real Estate (REIT or direct), BRK.a or BRK.b

25% of Assets go into your Growth Bucket
These assets should be held in an LLC or other protected vehicle

  • 10% Aggressive Growth Mutual Fund(s)
  • 20% Real Estate – Direct Investment into commercial, residential or land
  • 45% Collectibles: 10% of the 45% in Art / 90% of the 45% in Gold/Silver via Scrap-Coins-Bullion (kept in secure location)
  • 25% Your own small business (reap the tax benefits while increasing its value and enjoying its income)

6.5% of Assets go into your Dream Bucket

These assets can be anything from cars, boats, planes, etc.

18.5% of Assets go into your Maintenance Budget/Bucket
This is your maintenance bucket which is to pay ALL of your expenses during the year for when you do not work or for when you retire. This needs to generate income (preferably tax-free) to pay up to at least $X per year in expenses such as food, property taxes, travel, etc, etc.