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Family Office Prospectus: 2024 Q2

You may recall that I actively traded and used to send out updates but I stopped doing those updates a while back. The reason is that is not worth the time to actively trade.

Even if I make 30% in a year and the market returns 10% it is not worth the effort when I can make 10,000% in my own startups. I turned $0 into high six figures in a single year at LeftLane while getting paid. Before that I turned my personal income from 100 k to 400 k in four years of work. Why would I bother with active trading?

The other reason is cash was looking pretty good.

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My equity in LL is illiquid and there is a non-zero chance it becomes worthless.

What Happened

I sat out for the big down trend and also missed the rally with your money and mine. The reason is simple, with rates high, cash was king i.e. it offered a reasonable risk free return relative to the returns of stocks and bonds.

The market in 2022 saw an 18% loss and in 2023 a 24% gain. Which is a 1.56% net gain across those two years i.e.  0.819 * 1.24 = 1.01556. 

Those with good money market rates earned ~2.5-5% a year — essentially risk free which is about 1.025 * 1.045 = 1.071125 or 7.1% percent across both years — or roughly 5% better than being in the market for the same period. If you are in fidelity or IBKR that is true, if you weren't I'm not sure (everyone is now in fidelity as of Q1 — thank you for transferring it makes my life a lot easier).

Now that the market is in a solid uptrend I began rotating our money into the whole market in Q1.

What I Will do for You

My general outlook on investing is captured in 🤑How to Get 10x Returns Investing.

What is most relevant to this discussion is the section on whole market investing. There are two buckets of money — the safe bucket invested in the entire world market and basically the “go big” bucket for concentrated bets.

Think of the former as traditional retirement and the second as discretionary. An 80/20 split is reasonable — rebalanced annually. With that 20% you can make concentrated investments in great companies, highly speculative stuff like crypto, or people you believe in.

What I will do:

  • I will invest your retirement accounts via indexes of the whole market, no gun slinging without opt-in
  • I’ll give a performance recap annually
  • I’ll rebalance monthly
  • Over the long term I’ll balance cash vs. risk assets vs. “safe” assets mixes relative to retirement age (assuming 67) — primarily through a target date fund
  • If I spot an opportunity that I’m going to invest in I’ll let you know.
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A target date fund simply allocates less to stocks and more to bonds/lower risk stocks as you approach your retirement date

Note: I’ll be using Vanguard ETFs since they offer the best and most cost effective index funds that exist on the market.

What Will Happen till Next Time

I’ll start by investing 20% each month to dollar cost average back into the market. Then by the summer I will be doing a monthly rebalance to a 90/10 split. Where 90% is our asset mix and 10% is cash.

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This is a simple mechanism to buy low and sell high. When stocks go up, we get to say 95/5 then we sell back to 90/10. When stocks go down, say 85/15 then we buy cheap up to 90/10 again.

Updates will happen annually unless there is something salient worth mentioning.