How to Pay for Black Swan Insurance
A gift book from Santa Claus
Today is going to be a very special day, it is the last newsletter of the year 2022, and do you know what that means? Several things...
...First, that one of the worst years in the history of the markets is coming to an end, as no asset has behaved correctly. We have already warned about this throughout 2021, we have taken it into account, and this has allowed us to buy at very good prices.
... Second, one of the most uncertain periods in history is beginning. On the one hand, the FED has "managed to stop" the highest inflation in the last 40 years, and it seems that its strict rate hike policy will slow down. This opens the door for high-risk stocks and crypto to rise again.
... Third, so much uncertainty gives rise to black swans. Everything important in life comes from black swans. These black swans can make your life change for better or worse in a matter of a day.
Also, today we are giving away a book to all subscribers to read on your Kindle this year's end—a book we should all have in our library.
But the reason for this week's newsletter is to examine a hidden return that people despise, and that is actually very important in trying to capture the next black swan.
In a year where absolutely all assets have performed poorly, one asset has survived against them: the dollar.
We have already warned you about this. It is typical of this type of cycle that the DXY rises. Therefore, we position a large part of our portfolio in dollars. Not only that, but we use DeFi strategies to earn a great return with these dollars.
Many people look down on this return, but we are talking about a 6-10% annual return on 40-60% of our portfolio that we have in cash.
This is frankly unbelievable. We are talking about that with DeFi strategies, investing in dollars can have a much higher return than the historical average return of the S&P 500 (6.5%).
But there is a difference: the S&P 500 has had drops of 40-50%, while the dollar remains "stable".
So, it seems ridiculous to keep investing in index funds (unless they are leveraged) while we have these types of strategies that allow us to pay for everything we spend on black swan insurance per year.
This 2023 we have something in mind,