The best private equity investor in Spain gave a talk a few days ago. I took notes. You should too.
He said that the smartest thing he ever did was divide his wealth into ten boxes. Ten separate containers. Ten asset classes or strategies, each with a purpose, each with a risk level, and none capable of ruining him if it failed. This is not just risk management, it’s a form of mental liberation.
When we try to outsmart the market, we anchor ourselves to narratives. We chase recent winners and tell ourselves stories to justify why the trend will continue. We confuse a strong backtest with a future-proof idea. And we build our portfolios around what just worked.
This year? US stocks are not the winner. European ETFs are outperforming. But you wouldn’t know that from listening to the usual suspects on podcasts. Everyone is still talking about the S&P 500, like it’s some timeless gospel.
Our own asymmetric portfolio tries to do the opposite. We ignore headlines and narratives. We look for descorrelated flows, with different tax profiles and timing. Some of our subscribers have noticed it and praised the level of strategic disconnection. We’ll share one of those comments below.
This approach reduces emotional volatility. Because if one asset is down 40%, another is flat, another is paying 10% yield, and another is up 25%, your brain doesn’t panic. Your portfolio breathes. You have oxygen in the system.
The PE guy went further. He explained why private equity returns are not just about illiquidity premiums. It’s about psychology. When you invest in PE, you can’t sell. You can’t touch the asset. And so, ironically, your worst enemy, your own brain, can’t ruin the investment.
Five years later, a liquidity event happens, you receive a big check, and it feels like a bonus. This is why PE often beats the average investor: not because it’s smarter, but because it locks the idiot inside all of us in a box.
This has nothing to do with magic. It’s behavior. And it’s why institutional investors love PE. Just look at the endowment funds of Yale, Harvard, or Princeton. They all have 20 to 40% in private equity. Why? Because they know the real danger isn’t picking the wrong stock, it’s doing the wrong thing at the wrong time. PE removes that option entirely.
For example, this year Family Offices portfolio:
And yet, you won’t get rich from PE. Your fund manager might. He gets 2% of your money every year, and 20% of your profits. That’s why there’s a famous book titled Where Are the Customers’ Yachts? You’re not the one buying the yacht. The guy running your PE fund is.
So then, the real question is:
How do YOU replicate the discipline and returns of private equity, without giving up 20% of your upside?
Want to know how private equity managers structure their wealth? How YOU can build a private system that mimics the best parts of PE, with liquidity, cash flow, and no performance fees?”