THIS IS NOT INVESTMENT ADVICE
This was originally meant to be a piece about personal finance. But after going over it before publishing, I realized that proper conclusions need a bit more than just scattered thoughts. You need a broader framework.
Some of the ideas here might sound familiar. But in practice, the way I approach markets is pretty far from what you’d call the mainstream financial or political consensus. So it’s worth laying it out clearly — if only to make better sense of what’s actually going on.
What’s on the agenda:
- Why I think only a small number of securities are actually worth considering for conservative investing — and whether that list can realistically be expanded
- How to approach gold properly (or: “Gold investing for dummies”)
- Why invest in foreign markets at all — especially when someone like Anthony Deden prefers to stay within markets he fully understands
- Why speculation starts to make sense when things tighten up
- How to allocate personal capital across asset classes: stocks, bonds, metals, real estate, and alternatives
This isn’t about answering questions. It’s about showing the process so things actually make sense.
This project is basically a live stream of how I work. And I’m not changing anything for it. I use the same standards here as I do with my own money when I deal with the market — any market.
So let’s start with one key difference between how I see financial markets (and I’m not the only one) and what most people think is “normal” — the version pushed by influencers and the media:
*Thanks to the efforts of banks, brokers, the media, and VIP Discord channels, people outside the financial world have developed a frankly idiotic idea of what proper market activity looks like.
The idea goes something like this: “John is a brilliant forecaster.” Or: John has insider insights because he’s a hereditary Freemason — or maybe even a reptilian. Or John has some kind of super-algorithm that predicts Elliott waves and Kondratiev cycles for the next five minutes and the next five hundred years.
Accordingly, John bought Bitcoin at $1, sold it at $3,000, shorted it at $10,000, and bought it back at $5,000. He also put all his money into the Airbnb IPO at $150 and exited at $200. And a week before the next global financial crisis — complete with civil unrest and a collapse of the banking system — John escapes by private helicopter with a few models to his private villa somewhere in Thailand.
Sometimes, instead of a specific John, this role is played by a collective Goldman Sachs in the public imagination.
The real world doesn’t work like that. At all.
In reality, the people who survive and succeed over the long term are not those with perfectly accurate forecasts (those don’t exist, for purely mathematical reasons), and certainly not those who spend their lives trying to improve forecast accuracy. It’s those who are roughly right about the things that matter — and properly protected against black swans and other force majeure events.
This way of looking at the world is so far removed from social norms (and like it or not, we are social animals — stepping outside those norms causes anything from discomfort to something very close to physical pain) that it needs to be stated clearly from time to time.*
And since this view clashes sharply with conventional thinking — or, more accurately, with widely accepted myths — author occasionally will give examples of how real professionals in the financial world actually operate:
*The funny thing is that people who genuinely make a living from speculative trading — and do so professionally, either for themselves or for a very small and selective group of investors (there’s a reason their funds are usually closed to new capital) — never operate like that [like the mythical John above].
I could use myself as an example, but that wouldn’t be entirely fair, so let’s take Nassim Taleb — a professional options trader who made millions at BNP Paribas, UBS, Credit Suisse First Boston, and Bankers Trust long before he became an author (late 80s to early 90s).
In fact, it was those earnings that gave him the freedom to write books that weren’t narrowly technical or industry-bound. I was genuinely surprised when I first read Fooled by Randomness — it never occurred to me that the author of my favorite book on dynamic options hedging (Dynamic Hedging: Managing Vanilla and Exotic Options, 1997) could also be such a strong writer and philosopher.
Both Taleb himself and the traders he describes tend to operate in a much more conservative way: profits from speculation are regularly taken off the table and moved into something stable, profitable, and reliable.
When Fooled by Randomness was written, the Fed’s interest rate was around 6% — something that now seems almost unreal — which made plain bonds a natural choice for preserving capital (think of Taleb’s “barbell strategy”). Speculative trades and high-risk positions were kept to a clearly defined share of total assets — and nothing more.
In today’s era of monetary distortion, Taleb, myself, and many other professionals are forced to replace bonds with something less conservative, but still reasonably safe and inflation-resistant: for example, dividend-paying companies with real pricing power — the ability to raise prices without losing their position. And, of course, gold.
As Taleb once put it on Twitter (and in a Bloomberg interview), when asked about gold in his portfolio: “I am a reluctant long holder.”
What can you do? In times like these, preserving capital becomes the priority.*
A couple of notes on this approach:
The era of monetary madness isn’t over — it’s still ongoing. Earlier, at the beginning of this period, bonds offered low yields, and the money invested in them — or earned from them — bought fewer and fewer shares, meaning smaller and smaller stakes in real businesses. And ownership in real businesses is the only true long-term social elevator that actually exists. The same applied to real estate: fewer and fewer square meters of anything, almost anywhere in the world.
Now bonds — whether American, Europian, or anything else — may appear to offer higher yields, but inflation is high enough that those returns buy less: fewer shares, fewer square meters, and less of everything else too, down to everyday things like burgers. With that in mind, the stocks I look for in a conservative portfolio are essentially substitutes for “ultra-reliable financial instruments” in an era like this. I’m not looking for “buy low, sell high” situations — at least not in a conservative portfolio. I’m looking for companies you can hold for a very long time, ideally indefinitely. Those are rare. They always have been. And finding them at a reasonable price is extremely difficult.
To make it concrete, here are my criteria for a good stock:
- a timeless business model. Startups, high-tech, IT, airlines — anything built around something humanity didn’t need 500 years ago - no.
- a brutally clear business model, as simple as possible. Ideally, something like a mine or Coca-Cola production. The core idea must hold up in a crisis. The more boring the business, the better. strong political protection. This is a major competitive advantage - the ability to survive crises, management failures, even extreme scenarios. And no, state ownership by itself doesn’t tell you much. You have to look deeper.
- competent management. People who can actually run the business efficiently, without burying it under bad decisions or bureaucracy.
- a real controlling shareholder. Not a nominal one. The majority owner should be rational, disciplined, politically protected, and not sloppy.
- a clear willingness - and the actual ability - to pay solid dividends. That means manageable debt, stable income, and a payout ratio that makes sense. If there are no dividends, forget it. If there’s no profit, forget it. Growth is nice. Optional, but nice.
- if we’re talking about a consumer-facing business rather than a commoditized one, then pricing power matters - the ability to raise prices without serious consequences. Tobacco companies are a classic example. Direct dependence on regulation or tariff-setting is a different story, which is why utilities are often not what I’m looking for.
*The goal is simple: to build a portfolio of stocks that consistently pay dividends - ideally growing ones - that can hold up through inflation, crises, and currency devaluation, and that are run by competent management and controlled by rational majority owners with strong political backing. That’s what a conservative portfolio looks like.
Positions are sold only if something happens that breaks one or more of the criteria above. Ideally, the holding period is straightforward: you keep it long enough for your grandchildren to deal with it*.