by Brian DeChesare Comments (64)

How to Invest When the World is in Crisis Mode: Mid-Year 2020 Updates

Investments Mid-2020 Updates
I normally only publish market and investment updates at the start of the year, but the first half of 2020 has been a giant disaster worldwide.

So, it seemed fitting to revisit everything that’s happened and how I’ve changed my strategies in response.

Amazingly, I haven’t changed that much since January, even though we’ve entered the greatest economic crisis since the Great Depression.

My plan in January was to weight more heavily toward gold and equities, and that has been a smart move so far:

Changing Allocations

The main differences vs. January are:

  1. I sold all my U.S. Treasuries and moved the proceeds into gold and silver, with a bit more going into equities.
  2. I had one large exit on AngelList (Teachable), so I distributed some of the proceeds from that into other categories.
  3. I’ve purchased hundreds of S&P 500 put options as “disaster insurance.”
  4. And I’m applying for citizenship elsewhere. I plan to renounce my U.S. citizenship and move everything outside the country.

My current allocation looks like this:

  • Equities: 31% [Up 4%]
  • Cash & Savings: 22% [Down 4%]
  • Gold: 10% [Up 6%]
  • Real Estate – Equity in Individual Properties: 7% [Up 1%]
  • Real Estate – Senior Secured Loans: 7% [Down 3%]
  • Municipal Bonds: 6% [Unchanged]
  • Angel Investments: 6% [Unchanged – recording these at historical cost]
  • Crypto (Bitcoin, Ethereum, Others): 5% [Up 1%]
  • Miscellaneous (Risk Parity Fund): 4% [Unchanged]
  • Silver: 3% [Up 3%]
  • U.S. Treasuries: 0% [Down 6%]

The overall changes don’t look that significant, so it’s more useful to look at the specific accounts that changed the most:

Changed Account #1: Dumping U.S. Treasuries

In January, one account looked like this:

  • Total Stock Market Index: 20%
  • Small-Cap Value Index: 20%
  • Short-Term U.S. Treasuries: 20%
  • Long-Term U.S. Treasuries: 20%
  • Physical Gold Trust: 20%

I held the Treasury positions since late 2018 and earned a ~20% return on them.

But I sold everything in Q2 this year and moved to this allocation instead:

  • Total Stock Market Index: 25%
  • Small-Cap Value Index: 25%
  • Physical Gold Trust: 40%
  • Physical Silver Trust: 10%

Yields on Treasuries, even 30-year ones, are now below the rate of inflation, so it seemed pointless to keep them.

Yes, there’s still some potential for capital appreciation if the Fed moves to negative rates, but that seems unlikely.

So, with record-low yields and the inability for rates to drop even further, Treasuries seemed unappealing.

Sure, they’ll still “reduce volatility,” but in the current environment, precious metals seem like a much better option for doing that and earning above the rate of inflation.

Changed Account #2: Modest Reallocations

In another account, I planned to allocate 1/3 into gold and split the remaining 2/3 evenly between U.S. Small-Cap Value, Emerging Markets, and Non-U.S. Developed Markets.

But then the equity positions all fell, and gold rose over the past ~6 months.

Rather than rebalancing to the original mix, I decided to keep the equities as-is, add silver, and put a bit more into gold, leaving me with:

  • U.S. Small-Cap Value: 16.7%
  • Emerging Markets: 16.7%
  • Non-U.S. Developed Markets: 16.7%
  • Gold: 40.0%
  • Silver: 10.0%

The U.S. still has one of the highest CAPE Ratios of all markets worldwide, which means the chances of strong 10-year returns are low.

Just take a look at CAPE Ratios worldwide in December/January vs. May:

Worldwide CAPE Ratios

In short, the U.S. is still as expensive as ever, while most other countries are as cheap as they were in January, or significantly cheaper.

Also, most other countries are not currently burning down and on the verge of societal collapse, which might provide a slight benefit to business conditions.

Why Fixed Income Will Be Terrible for the Foreseeable Future

I am extremely bearish on all fixed income, but especially government bonds in developed markets.

In real terms, government-bond investors are likely to lose money over the next decade, similar to what happened in the 1940s and 1970s.

Bonds have been in a bull market since the early 1980s, driven by falling interest rates.

But interest rates cannot fall much further, and most governments are printing so much money that inflation will exceed even modest, positive yields on bonds.

Yields on corporate bonds are higher, but by historical standards, they’re still exceptionally low:

Corporate Bond Yields

The best parallel seems to be the 1940s, when Debt / GDP was even higher than it is now, inflation averaged 5-6% per year, and the Fed used “yield control” to artificially suppress rates.

The Fed buying corporate bonds also scares me because if they ever reverse policies, the entire market could come crashing down.

I can think of only one reason why a retail investor should bother with fixed income: if every other asset performs even worse, and there’s low inflation or outright deflation.

That’s possible, but I’m skeptical that gold/silver, global equities, real estate, and crypto will all post negative returns over the next decade, while bonds will miraculously be neutral or positive.

And yes, I still have some municipal bonds, but that’s because Wealthfront annoyingly only lets you change your “risk score,” but not individual asset allocations.

Inflation vs. Deflation, Gold, and Silver

I often get pushback from people who disagree with my large positions in precious metals.

Their usual argument goes like this:

“People said the same thing about QE 1, 2, and 3, and look what happened! There wasn’t much inflation, and gold prices fell back down to earth in 2013. The same thing will happen this time – asset prices may inflate, but the ‘real economy’ won’t see much inflation.”

My responses to this argument are:

1) I disagree with the premise that “there wasn’t much inflation” in the 2010 – 2019 period. Just look at healthcare and education prices:

Economy Prices by Sector

Inflation has been here for a while – it’s just not evenly distributed.

If you want a real measure of inflation, look at the growth in the money supply over the past ~10 years, and you’ll see the story: average growth of 5-6% per year before it spiked in 2020.

2) This time is different because the government is distributing money directly to people. That did not happen with QE 1, 2, or 3 – the new money went onto banks’ Balance Sheets.

This point still doesn’t mean we’ll see general inflation in CPI or other metrics.

My guess is that inflation will become even more unevenly distributed, with significant increases in some areas, no changes in others, and deflation in others.

3) An expectation of higher inflation is not the only reason to buy precious metals.

Some people argue that the U.S. government will inflate its way out of its massive Debt balance, and others argue that it will raise taxes or “cancel” Social Security and Medicare.

But I believe there’s another possibility: French Revolution 2.0.

The Fed’s actions since the start of the crisis have made wealth and income inequality in the country even worse.

Past a certain point, economic inequality will get so bad that people will start destroying companies and beheading the wealthy in the streets.

If that seems far-fetched, protesters have already set up a guillotine outside Jeff Bezos’ mansion in DC.

Put Options for Hedging “Tail Risk”

OK, now back to investing for a bit.

Sophisticated hedge funds like Universa buy far out-of-the-money put options on stocks to mitigate risk and reduce the “volatility tax” from the negative compounding of large losses.

I am just a retail investor with a tiny fraction of their capital, but I’m now using a similar strategy to hedge against the risk of another big drop in the S&P 500.

Specifically, I’ve purchased hundreds of put options rather than outright shorting the index:

  • Exercise Prices: Range from 1500 to 2500.
  • Expiration Date: Dec 2022.

The rationale is:

  1. Not only will there be a second wave of the virus, but the first wave is still ramping up in many parts of the U.S., with lockdowns to follow because people are too stupid to wear masks.
  2. The FAANG companies will face some serious headwinds in the next few years, driven by government regulation and possible breakups.
  3. Even if the Fed intervenes massively once again, there’s no guarantee that it will “work” if there are serious fundamental issues, such as a civil war that kills 50 million people.

Other Major Changes: Reducing U.S. Equities Exposure and Buying More Crypto

Overall, I still have too much exposure to U.S. equities, especially in retirement accounts.

I want to reduce my exposure to a maximum of 1/3 of total equities, so I plan to reallocate some of these accounts.

I also plan to increase my crypto holdings to ~10% of my total portfolio, but I’m holding off for now because I waited too long to buy Bitcoin after its price dropped earlier in the year.

There’s one problem with both of these plans, though: all my accounts are still based in the U.S., and that is now a risky proposition.

The best strategy is to maintain accounts in different countries in different currencies.

But FATCA makes that incredibly annoying (some international banks won’t even open accounts for U.S. citizens, etc.).

There is one solution to that problem:

Renouncing U.S. Citizenship

I’m seriously considering renouncing my U.S. citizenship because I think the country is headed for 3rd world status, if it’s not already there.

The government is a joke, full of ineffective idiots who can’t govern, make meaningful changes, or stop cities from burning down.

If you thought the country had some special status before, the virus crisis should have opened your eyes: it’s now the laughingstock of the world.

I haven’t really “lived there” in nearly a decade, and I feel like an idiot paying federal income taxes in exchange for absolutely nothing.

So, I’m applying for citizenship in an EU country, and I’m also considering New Zealand or Singapore via investor visas.

Smaller countries govern more effectively, and citizens of those countries get something in exchange for their taxes: healthcare, infrastructure, a university system that works for non-billionaires, etc.

Strong Opinions, Weakly Held

To be clear: nothing in this article is “investment advice.” These are my personal views, backed up with a bit of data.

And I’m always open to changing my mind if new evidence or better arguments present themselves.

So, I’m curious to hear what you think about these points:

  • Are you also bullish on precious metals, or have I gone crazy?
  • Will the S&P 500 crash again, or am I delusional with the put options?
  • Should individual investors bother with fixed income in the current environment?
  • Finally, am I overly bearish on my views for the U.S.? Does it have some upside that I’m not seeing? Or, do you agree but cannot leave for various reasons?

In particular, if you’re an international student, I’m very curious about why you’d pay full tuition for Zoom classes in a country that’s also on the brink…

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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  1. I am also interested in moving to Europe. I am just curious which countries do you think are good places to live. As far as I know, the healthcare system in some countries (e.g. UK) also sucks.

    1. Too broad a question to answer because I don’t know what you’re looking for. Many countries have less advanced testing and surgical procedures than the US, so I actually still do those and pay out of pocket in the US. But if you just want more of an assurance that you won’t go bankrupt from breaking your leg, any of the southern European countries have fairly cheap health insurance plans for non-citizens, and you can become a resident in those countries for a modest amount.

  2. Avatar

    You mentioned you use/d Wealthfront, AngelList, PeerStreet, etc. so I was wondering how many other accounts do you use to invest? What are those platforms?

    1. I’m not going to list every single account here, but there might be 10-15 total. I don’t recommend this setup for most people because it’s too complicated to manage and track everything. I am doing it only because I don’t want to risk losing a huge amount if one service shuts down, the founders steal everyone’s money and run off to an island, etc. So I distribute smaller amounts into different accounts.

      1. Avatar

        So which of those platforms do you like the most for each of the different asset classes: e.g. equities, fixed income, Real Estate – Equity in Individual Properties, Angel, crypto etc.?

        1. I spend maybe ~30 minutes per month reviewing the accounts, so I’m not sure what to tell you here. They’re all about the same, but the newer platforms have better interfaces and integrations with other platforms.

  3. Hi Brian,
    First off thank you for this article because it really is great and very informative.
    1. I really want to get into investing but there is so much information and terms that I either don’t know or fully understand. How can I improve upon my knowledge in investing? What books did you use to teach yourself accounting/finance/investing/trading?

    2. What jobs would you recommend for an good old-fashioned hard worker and making as much as possible,(regardless of my job preferences). Also, If you could start over, would you still start in IB? What are the best high-paying jobs of the future?

    1. 1) I’ve never read any books or taken formal classes. You just have to get practice by trying it yourself, seeing what happens, and repeating until you improve. You can take courses, read books, etc., but the only way to make any of it stick is to download a company’s financials, try modeling and valuing it yourself in Excel, and keep doing that (for individual stocks).

      2) No, I would not start out in IB again, and I wouldn’t even go into finance. In fact, I’m only maintaining this site because of the amount of time/money/effort already put into it. If you work hard and want to earn as much as possible, you should probably do sales anywhere, but ideally at a tech or software company, because they need people who can sell, and your upside is unlimited if you’re good at it.

      1. Thanks for reply
        1. I’m posting on this site because I’m not sure what sources of info to read, what books to read, and how I should better understand finance and the market. I don’t want to waste my time learning bullshit. However, I have extremely little knowledge of finance. Do you think investing books (Graham, Margin of safety, Peter Lynch…) are a waste of time? What’s the best way to learn about asset classes, modeling and valuation?

        What Books would you recommend someone read to improve their general knowledge of the world, history and finance?

        2. Sales could be a great fit for me. I think sales and investing could be a good way to become rich. What would you do knowing what you know now, if you could start over again?

        1. 1) Yes, those books are all good starting points. But you really need to learn about accounting and the financial statements to understand investing in companies. We have courses, guides, etc., but if you want a book, start with one of those (also see “Interpretation of the Financial Statements” by Graham and “Financial Shenanigans”).

          2) Depends on the time frame. If I had to start over today in 2020, I would still start an online business, but probably in some other market or do something software-related instead, such as a simple subscription service. If I had to go back to 2007, then this site was still the best move at the time given my constraints and the fact that the market was much more appealing back then.

      2. Software sales rep here.

        Why no go on finance?

        There are currently too many software companies (just search “martech 5000” and you’ll see what I mean).

        All the smart people I know are shifting over to med/biotech, I feel like that’s the place to be for the next two decades, no?

        1. Why? Because finance is a declining industry, and it serves no purpose other than making money and making wealthy people even wealthier. I think it’s OK to start there, providing you don’t have to put in a ridiculous amount of effort to get in, but it’s a less appealing long-term career now, especially at large firms.

          I don’t think there are “too many” software companies. There are always problems waiting to be solved, and most software does not need to be that complex to do it. Yes, maybe there are too many VC-backed companies seeking to become unicorns, but you can always find niche markets with $1 – $10 million in potential revenue and become wealthy with a small team.

          Med/biotech may be more important in coming decades, but it’s also far less accessible than software/internet/information products, requires far more time and capital, etc.

          1. Do you have data re: finance is a declining industry? Finance seems to be evergreen.

            I’m spent my entire career (10+ years now) selling software and I can tell you there are WAY too many software companies, no joke there is a SaaS application and 10 clones for every conceivable niche… it’s insane.

            Med/biotech was far less accessible, but I don’t think that’s true anymore with recent advances in machine learning.


            The number of front-office IB roles has declined 5% between 2014 and 2019, and the decline in S&T is more like 15-20%. Maybe it’s not the end of the world, but it’s hard to say that an industry with 5% fewer jobs is doing well. And with this year’s numbers, it’s probably even worse.

            The more fundamental issue is that the conditions that made finance an attractive industry are not going to last forever (falling interest rates since the early 1980s, debt monetization, massive growth in the money supply, growing wealth/income inequality due to tax and regulatory policies and their implementations).

            Yes, of course markets attract more competitors over time. Look at this market for interview prep and financial modeling: there are now dozens of competitors, whereas 10-15 years ago (starting out), we had maybe 1-2 serious serious competitors. That doesn’t mean you should avoid it altogether, it just means you approach it differently and take a different angle.

            I think a lot of the engineering/tech types who keep talking up med/biotech (e.g., Marc Andreessen) are going to be in for a rude surprise when they realize that the human body doesn’t work the same way as a computer…

  4. Hi Brian, Thanks for a great article. I agree with most of your points, I too am bull on Gold and Crypto and bearish on fixed income. However equities we may slightly disagree. I’ll start by saying I am bearish on USD but not so much on US equities.

    I understand the rational if the entire country collapses into a civil war… but a civil war by Dec 2022 seems a bit stretched. Aside from that my main reason for being bull on US equities is that it seems like the Fed will stop at nothing. Almost every recession’s bottom out occurred once the Fed stepped in and provided stimulus (2020 being no exception). By going short the market, your essentially betting against the Fed. Furthermore, if hyperinflation is a concern, wouldn’t the stock market still rally. Take Venezuela for instance, when hyper inflation was at its worst, the market returned thousands of percent (a real loss compared to the million percent of inflation), however any short or put options would render useless… being long stocks seems like a way to hedge against high levels of inflation.

    I understand being short the “real economy”, but the financial economy does not seem to be related to the real economy in times like this. Would like your thoughts on this?

    On a side not, have you ever considered making a post about what a world would look like if China was the main power? I know you are somewhat bearish on them due to the middle-class trap, but many experts seem to think they will continue to grow and overtake the US in the next 10-20 years economically, politically and militarily.

    1. Sure, the stock market can still rally in nominal terms, but I don’t think hyper-inflation within the next two years is a likely scenario. I expect rising inflation, but probably not a massive increase unless there’s an actual war.

      Yes, I am betting against the Fed in some sense, but there’s no guarantee that continued intervention will always “work.” Also, the Fed is running out of tools unless they resort to negative rates or just give up and print $100 trillion or something. But I could be completely wrong, which is why I’ve used options rather than outright shorting.

      I’m probably not going to write a speculative article about what would happen if China became the major power because it’s a bit off-topic, and I’m not sure I know enough about all aspects to write about that. Also, there’s not much actionable advice to give: it’s not like everyone can just pack up, immigrate to China, and find jobs there.

  5. Avatar
    Bob Smith

    Inequality drives Violence

    Higher gini coefficient = higher homicide rate

    I expect the homicide rate of America to increase dramatically in coming years

    If it is logistically possible for you to leave the country, do so.

    America isn’t the worst country, but it definitely isn’t the best.

    1. I haven’t “lived” in the U.S. full-time since 2012 or so. The real question isn’t the possibility of leaving, but of renouncing citizenship, which is expensive (exit tax) and logistically difficult. But I agree that the U.S. is no longer the ideal place to work or live and hasn’t been for a long time.

  6. Hi Brian. You mentioned you enjoy studying history, is there any books you recommend reading? Any books specific to the raise and fall of currency’s as it seems to be a legitimate risk in the USD?

    1. I haven’t read that many history books about currencies, specifically, but Niall Ferguson’s books are good (The Ascent of Money). Mostly, I read about whatever interests me at the time. I like Dan Jones’ books (Crusaders, Plantagenets, Wars of the Roses) and recently read and liked 1491 (Charles C. Mann) and The Second World Wars by Victor Davis Hanson.

      Yes, some of these authors are political and view current events a certain way, but when they write about historical events from decades/hundreds of years ago, there isn’t much bias.

  7. Avatar

    Do you think we should go back to the gold standard?

    1. I don’t know if it’s even possible at this point.

      The gold standard might improve some issues, but I’m not quite sure it would “fix” the massive financialization of the economy and wealth/income inequality. We were on the gold standard in the 1920s, and look what happened.

      I think the bigger issue is eliminating central banks or greatly reducing their power and influence.

      1. Avatar
        Jonathan Kamps

        Hi Brian,

        We spoke on twitter.. love the article. In response to your comment, “bigger issue is eliminating central banks or greatly reducing their power and influence.”

        You are not the only one saying this.. many macro investors such as Michael Saylor, and Raoul Pal are saying this but they are all in on the idea of BTC, which is why I posted you believing it is over-hyped (does that mean over”valued” to you or just currently over-hyped, will drop 10-30% and then you will buy in LT?) I believe BTC will reach anywhere between 1/4 to gold’s price or even more LT. Everything about it makes sense, but the government and regulations of course will be an issue, but I think the decentralization part gives it the ability to thrive regardless. I am betting on BTC and I look forward to reading your article on it.

        I enjoyed reading your reply’s I have taken most of your courses as you have taught me a substantially amount in finance and excel and for that I am beyond grateful. haha.

        1. Investing is always probabilistic. Yes, there is a possibility that Bitcoin’s price will increase substantially, but there’s also a possibility that it will go to $0. If you ever think that something is a “sure thing,” and CNBC is also saying the same thing, then you may want to reevaluate your beliefs. CNBC and other mainstream sources have been hyping Bitcoin so much that I’ve become skeptical.

          Bitcoin is primarily a risk asset that’s heavily correlated to the S&P 500 and NASDAQ (just look at what happened to all of those in March 2020). If it were truly a hedge against central banks, then its price should increase proportionally with the increase in the fiat money supply worldwide – but it has gone far beyond that.

          So, yes, it has potential, and it’s worth putting some percentage into crypto. But if you put 100% of your assets in crypto, I would call that absolutely insane.

  8. Hi Brian, I’m Chinese working in IB in Hong Kong now. Just curious, do you think the rising of China will last? Is Hang Seng index or Shanghai index worth investing? I invested in US index this year, earned a 10% but now see Hang Seng and Shanghai boom a lot these days.

    1. I expect China to outperform over the next few years, and you definitely want to have some emerging markets exposure (which, these days, means “50% China”). Longer-term, China might fall into the “middle income trap” where it never quite becomes a “developed country” despite having the highest nominal GDP in the world. Demographic issues will also become an issue in the long term.

  9. Hi Brian,
    I have a been following you for a year. As usual, all of your articles have blown my mind.
    I am living in New Zealand myself, and in contrast to your situation, I would like to invest in the US. Because the choice of investment in New Zealand are so much less than in US. There is only equity and bond, no derivatives (in fact, they exist but no one is using them). Even the equity and bond market are not very liquid, people are not trading as much as in the US. Trading fee are much much much higher.
    There are brokers that provide me access to the US market but it seems there is no product that allows me to hedge the FX rate. That FX conversion risk is the main reason that put me off from investing overseas, from New Zealand.
    Anyway, my point is, I am not sure how will you invest, if one day you decide to live in New Zealand, and your primary income is also in NZD??? If you have thought about that, that’s great. Can you share your thought?
    If you have not thought about that, maybe that would be something you should consider before making the move.

    1. Thanks. The short answer is that FX issues don’t affect me because all my income is earned online from worldwide sources. Around 60% is in USD, but the rest comes from a mix of CAD, EUR, GBP, etc., and all online payment processors accept payments made in all currencies.

      There’s no requirement to earn income in NZD just because I’m a citizen of the country (all income would be converted into NZD for tax purposes, but that’s it) – and I could still keep bank accounts in different countries and currencies. A co-worker has a USD-denominated bank account in the U.S., even though he’s a citizen of New Zealand and doesn’t even have residency in the U.S., let alone citizenship.

      Remember, the goal isn’t to “switch” currencies – it’s to avoid being tied to one specific currency or banking system. Sure, my daily spending would move to NZD, but I spend so little in daily life (mostly food), that I’m not too worried about that.

      The biggest issue is that some of the investment accounts I use, like Wealthfront, only allow U.S. citizens. So, I would have to transfer assets out of those. But there are plenty of robo advisor and automated services in other countries as well.

      All of this takes time, so it’s not going to happen overnight. But it’s doable within a few years.

  10. Hey Brian, have you thought about moving to Canada?

    1. Yes, and it would be better in some ways (healthcare, education, taxes), but if the U.S. collapses or gets very bad (worse?), Canada will be severely affected as well. I like Singapore / Australia / New Zealand because they’re more closely linked to Asia.

  11. Hi Brian, a few q’s please:
    a) what’s your take on inflation adjusted bonds, i.e. TIPs?
    b) what exactly is this investment ” Real Estate – Senior Secured Loans” ?
    c) have you ever incurred any losses through angel investing? what criteria do you use to invest in these types of projects- aren’t they usually high risk, especially in this environment?
    d) why are you bullish on crypto?
    e) why do you want international brokers? can you not just invest in non-US domiciled ETFs instead?
    Thanks and good luck!

    1. a) I don’t really like TIPS because I don’t believe their measure of inflation. If they adjusted based on the growth or decline in the money supply rather than CPI, they might be OK.

      b) Loans on PeerStreet (crowdfunding site for RE debt). But I’m in the midst of selling most of this (slowly, due to lack of liquidity).

      c) Yes, plenty of companies have failed. That is just how the game is played – in early-stage investing, expect 50%+ to fail. Your goal is to find the one company that returns 10x or 20x or 100x. I have one company that returned 10x, others that have failed, and others that are somewhere in between (multiples of 1x – 3x). I have not found the next Google or Facebook yet.

      I’m not actively investing in startups anymore; most of these are from 2014-2015. I just picked companies where I knew something about the market, liked the idea, and saw demonstrated traction. I wasn’t super-selective because I only put a small percentage of my assets into it.

      d) Because central banks keep expanding the money supply at a furious pace, which means all currencies will depreciate. But there’s a limited supply of Bitcoin, and eventually, I think the central banking system and fiat currencies will “break” because worldwide Debt / GDP cannot expand forever. When that happens, people will switch to crypto. It’s already happening in countries that have had currency crises (Venezuela, Argentina, etc.).

      Of course, I could be completely wrong. But I don’t see any downside to putting a small percentage into crypto. The downside is capped, and the upside is potentially unlimited.

      e) I think there’s risk that the U.S. government will seize domestic assets, even if they technically track assets outside the country. This has already happened before – in the Great Depression, the government seized peoples’ gold. Yes, they “compensated” the owners, but then they immediately devalued the dollar.

      In general, I think people are too complacent and don’t consider a wide enough range of possible events. I enjoy studying history because it gives you the sense that completely crazy and unexpected events are plausible, even if they’re not common or likely.

      1. You move around a lot, do you find it difficult to get set up in new places?

        Do you at all envy friends/acquaintances with more stable lives?

        Any desire to “settle down” at some point in the future?

        Asking because I’m preparing to follow a similar path.

        1. I don’t recommend moving around constantly over a long time period, such as 10-15 years. Also, who knows if that will even be possible in the future? What if COVID lasts for decades?

          Getting set up in a new place is not difficult since I “live” online and know how to find places and navigate the local systems by now. The bigger issue is that it’s difficult to stay in touch with friends from university, previous jobs, plus newer ones, and then make new friends at the same time. I’ve pretty much stopped trying to make new friends at this point because I am close to “settled” (have been in Europe for ~3 years), and I’m too busy with family, pets, etc. to bother.

          I think it’s similar to job hopping: fine to do early in your career as you figure out what you want, but eventually, you need to settle on one path and stick with it.

      2. Any good history book you recommend to read?

        1. About what? It’s a pretty broad topic. Which period, subject, writing style, etc.? I like Dan Jones’ books, which are considered “pop history,” on the late medieval period.

  12. Avatar
    Steven W

    Hey Brian, I was curious how your angel investments have done (realize it’s a long game) and if you are happy with the exposure to that asset class through AngelList (I also invest through AL). Thanks for the interesting read!

    1. According to AngelList, I have a 15% IRR and 2.1x multiple on my investments there, but that also includes unrealized gains. The granular reporting on AL is not great, but if you remove the unrealized gains, the IRR might be half of that.

      Overall, I think it has been “OK” but not spectacular. I made the mistake of investing small amounts in dozens of individual companies, which is not really the best strategy (too easy to get diluted, no informational advantage, etc.). Also, tax reporting is a nightmare because companies always “forget” to issue K-1 forms or are very late doing so.

      I think it’s fine to have 5-10% in angel investments, but I wouldn’t go beyond that. And if I make any more of these investments, I’ll do so through entire funds rather than picking individual companies.

      It’s just like investing in stock/bond indices rather than individual companies: unless it’s your full-time job, you probably shouldn’t be picking individual startups or companies.

  13. I’m also hedging my portfolio but I’m doing it by shorting the market. Doing a bit of L/S strategy, only earning the alpha and lowering volatility. Both of our bets, in essence, are lowering our betas. I’m not really sure which approach is the right one but my reasons for not buying puts is because the leverage achieved from that vs shorting the market is a little tough to assess accurately, making it harder to know how much beta exposure you’re actually hedging. Would like to hear your thoughts on it.

    1. That is a good point. I’m not sure about that one because I haven’t really thought about it like that – I just dislike shorting entire indices rather than individual stocks. I’m viewing the puts more as “disaster insurance,” and I don’t mind losing money to pay for that each year. On the other hand, you can potentially earn a lot more with a short if the market declines even a bit, so in that sense, you’re ahead.

      I think it comes down to what you’re trying to hedge – the risk of a modest decline, or the lower-probability risk of a big crash. I’m not too worried about a 10-15% drop, but a 50% or 70% drop could be catastrophic.

      1. I see your point with really just cutting off tail risk. I guess my strategy right now goes more with minimizing volatility in this “kangaroo market.” I started by choosing equities with diverse revenue streams and smaller drawdowns in corrections/bear markets. Ray Dalio’s been talking about diversifying everything lately so I’ve been considering it. Might start looking at some commodity streaming companies, REITs, crowdfunding, etc.

        Quick question, any particular reason why you don’t like shorting indices?

        1. I think it’s risky to short indices, especially ones like the S&P 500, because most of them are weighted by market cap. So, even if most companies in the index fall, a few companies that make up a big percentage of the total market cap could outperform and result in minimal losses or even an overall gain. Just look at what happened since March with the equal weight vs. market weighted versions of the S&P. Business fundamentals collapse, most companies suffer, but FAANG outperforms and “everything is OK.”

  14. Hi Brian,

    I am considering leaving another equally crazy country, China. I am doing tech investment banking in Hong Kong and considering leaving for Europe. Do you think London will be a good place to work as a finance practitioner for the tech firms? For semiconductor segment, for example, it seems that only US and Asia have great growth potential.

    1. If you have the right visa, sure, you could work in London, but I’m not sure it’s better than HK for tech. The centers for tech seem to be the US and Asia, at least for now. Though with recent developments in China and HK, I can see why’d want to leave.

  15. Although I am S.African, I have benefited a lot from these articles and think a comment is due. Especially since Covid-19 has us on lockdown the world over. I think the portfolio you have is well balanced from an equities and commodity aspect but am sceptical of the necessity of increasing exposure to virtual currencies.

    Point1: Precious Metals are cyclical and have been in times of economic hardships (risk-off implies higher commodity prices especially gold). The way in which you have included silver is good for diversification purposes, I would imagine also good for a conservative growth view during a pandemic.

    Point2: This is one of the best things one must do – and is also probably one of those scenarios where the market (through stimulus packages and stupidity of rebelling against lockdowns prolongs) stays longer irrational than your put option exercise dates. A catch 22 indeed. Congress will devote more to stimulus checks and that will be followed by the looming increases in taxes to not only make up for the Trump Administration tax cuts but also the pandemic stimulus packages. Invetsor’s will in my view once again tow the line of overpricing securities.

    Point3: This is particularly interesting for me too since the economy looks set to surrender growth not just only in the pandemic but after that beautiful and best trade deal with China is concluded by the Trump Administration. America is a big country – not a great country (though admittedly you went from having the best president to the worst overnight). We as the world looking from the outside were shocked when Trump became president – but you are just as correct to note that we are now laughing!
    Corporate debt will, in a hold situation by the Fed, remain stable, but businesses who traditionally require the lockdowns to be lifted will suffer. Government bonds on the hand are as good as cash so any fixed income position in my view would be speculative at best before we see any vaccines.

    Point4: U.S. for most people resembles safety. More so for refugees and investors alike – its the land of promise and order. Well not right now with protestors clashing with protesting police. This is child’s play from a point of chaos although there is more room for things to get worse largely from inaction and continued racially segregationist rhetoric from both Trump and Republican members of congress.

    We in SA have our fair share but America seems to be taking its turn to go through the most.

    Oh and yeah don’t renounce your citizenship, get a dual one (if possible). Being American on paper from a travelling perspective is great. Not so great if you are not. But anyway what do I know? Lol

    1. Thanks for sharing. I think we’ll have to agree to disagree on some of this – regarding the best and worst presidents, I don’t think you can make a judgment until at least 50-100 years have passed. Otherwise, it’s too soon to say what the long-term consequences will be. Trump may be an idiot, but the country’s problems were building up for decades before him – sure, maybe he’s made thing worse, but starting in 1971, everything began a downward slide (see:

      I don’t know if the US is the land of “promise and order.” Most others outside the country seem to think it’s the land of disease, violence, and poor people dying in the streets, at least in the big cities.

      Renouncing citizenship makes sense in my case because with dual citizenship, I would pay a 60-70% effective tax rate on income due to taxation in multiple countries. Also, the US passport is actually weaker than that of many other countries (

      1. I just read through that 1971 website, one thing that struck me was that median female income has outstripped median male income for the past 4 decades…

        Is that accurate?

        I did some more digging and found that women also received more undergraduate degrees than their male counterparts over the same time period.

        Is this true? If so, why do we keep hearing about the “gender pay gap” in the context of women getting screwed? Shouldn’t it be the other way around?

        1. Yup, I believe that is accurate, and more women started attending university as well. And now a higher percentage of women than men have undergraduate degrees.

          With the gender pay gap, it’s significant if you look at aggregate male and female average wages, but if you adjust for job type and title, it gets much, much smaller. So the issue is more that women tend to be in lower-paying jobs and have lower titles, not that they’re necessarily earning less for the same work ( You could say that’s a form of discrimination as well, and maybe it is in some cases, but I also think men and women are different and are drawn to different activities (wait, is that politically correct? Will I get cancelled now?).

  16. Do you also consider Australian citizenship?

    1. I considered it (I previously had a 12-month visa there), but I prefer New Zealand as a place to live. It also seems to be a bit more difficult to get citizenship in Australia, the relevant tax rates are higher, etc. They’re both overly dependent on China, which is a problem, but it’s hard to escape that these days.

  17. Hi Brian,

    thanks for the valuable insights as always, how did you achieve 20% return on treasuries?

    1. I bought 20-year Treasuries when yields were near their highest point (around 3%) and then sold when yields had dropped to around 1.2%. When yields go down, the price of fixed-income securities goes up.

      Take a look at the chart for VUSTX ( over 5 year to see the price movement. The price went from around $12 to $16 in 1.5 years.

      But I also had the same percentage of short-term Treasuries, which increased by far less due to their shorter durations. So it was less than a 33% gain.

  18. Were the bonds you owned zero coupon?

    I think gold makes sense – you’re basically going “long fear,” and I think people get more afraid before they become less so… What about copper and/or other commodities?

    Very curious, what has been your overall return on your angel investing?

    The world heat map is very interesting… Long Australia? I like that idea.

    I think it’s super interesting that Warren Buffett hasn’t said anything like “Buy American!” since covid hit, as he usually steps up in times of panic. What does he see that we don’t?

    If the U.S. is goes down, do you think Canada follows in lockstep? I was planning on bugging out to EMEA in September.

    I purchased a handful of puts (not nearly enough!) a few months before the crisis when Gary Shilling & Michael Burry were saying short the S&P….

    But they were cheap then. I feel like long dated puts must be super expensive now, or am I mistaken? Also if there is civil war, I feel like those puts won’t pay…

    Outside of bitcoin, what crypto do you own?

    1. Nope, the U.S. Treasuries were yielding something like 2-3% when I first bought them in 2018.

      Copper and other commodities could be good as well – I just haven’t done as much research on them. But I think they’re more exposed to actual supply/demand in the real economy, so I’m not sure the big increase in copper prices since March this year is sustainable. Sure, Chile is not producing right now, so prices have skyrocketed… but what if demand for electronics plummets?

      According to Angel List, I have a 15% IRR and 2.1x multiple on my investments there, but that also includes unrealized gains, so I would take it with a grain of salt. I only list them by historical cost for this reason.

      I think Australia is definitely more promising than the U.S. markets at this point. Relatively competent government, easy to isolate if there’s a crisis, and its central bank didn’t go too crazy with interest rates last time around.

      Yeah, Warren Buffett’s silence is telling. I think he has no clue what is going to happen, just like everyone else.

      Canada will be severely affected if the U.S. economy goes into a tailspin. But I think social unrest will be less of an issue there because of differences in the healthcare and education systems.

      Premiums on long-dated 1500 puts were not that much, but yes, they were expensive for the 2500 ones. I could easily lose the full premiums, but that’s better than actually shorting the market and then taking unlimited losses if the S&P defies all logic and keeps rising.

      I also own Ethereum and some of the smaller alt-coins (Tether, XRP, etc.).

      1. If the market crashes below 1500, will those puts even be worth anything?

        That’s a REAL crash, and I feel like whoever is on the other end of that trade would go bankrupt…

        1. I am not worried about that. Something similar happened in 2008-2009, and put options still worked. I have them because I think the S&P is insanely overvalued right now.

          But the real way to hedge against the risk of U.S. markets falling is to diversify outside of U.S. stocks and weight much more heavily toward international ones, which I’ve been doing. If I have only 20-30% exposure to U.S. stocks within equities, even a 50% market crash will barely make a difference.

  19. Hi Brian,

    Very interesting read. I was most interested in your consideration to renounce US Citizenship. I still have my parents/family here in the US, but I met a lot of international friends in college, some of whom have returned to their home countries like Australia. I was planning on visiting Australia this year before all of this insanity started. Still hoping to get there eventually. Based on your post, I get the sense you dont live in the USA anymore? I read an interesting site called Nomad Capitalist, a very interesting site about some of these things. If you dont live in the USA and dont plan on returning, renouncing citizenship would probably make sense.

    I think there is no doubt the USA is on a dangerous path. Things can be fixed and changes can gradually be made, but the first thing is that the two party system needs to end. That kind of politics forces people to play against each other in a zero sum game instead of building coalitions with other parties with similar views on certain issues. Nothing will change as long as 2 parties are allowed to control the country.

    I didnt vote for either candidate in 2016, both are horrible people. I had hoped that either candidate would turn people off to big government and show people how inefficient government is. I have clearly been wrong as it seems more people are depending on government like its their religion. Not sure what it will take to get people to turn it around.

    I have thought maybe about buying citizenship down the line from a country in the Caribbean. Seems like some countries offer citizenship for as little as $100,000. I think there is a lot of value in having multiple citizenships, as a good hedge if nothing else.

    Long term, I hope we see a weaken Federal government and people remember the 10th Amendment. Stronger state governments where they can compete with each other in terms of jobs/quality of life, would be good. The problem is I dont know what that catalyst would be.

    I guess my question to you would be, are you worried about some of the problems the regions you are considering have? Like the rise of China and how it might impact certain countries in that region or some of the long term problems Europe has?

    1. I still have an address in the US, but I haven’t “lived there” full-time since 2012 or so. I spent time in Asia, South America, and now Europe.

      Yup, I agree that everyone in politics is stupid. I look at political news now and usually want to down several shots of tequila each time.

      I’ve thought about Caribbean citizenship, but I’m not sure it makes sense because those countries have fairly weak passports, and they’re not “real countries” in the same way actual city-states like Singapore are.

      Yup, the rise of China is a concern everywhere, but you can’t really do much to escape it. Other Asian countries are dependent on it, so is Europe, so are Australia and New Zealand, China has now colonized most of Africa, etc.

      However, there are degrees of risk – with the rise of China, I would be more afraid to be in India, Japan, or South Korea. Singapore is further removed and so small that China probably wouldn’t bother to invade with an army.

      Europe has plenty of problems as well, but at least people can get healthcare and a university education without going broke. For health insurance here, I pay half of what it costs in the U.S. and nothing beyond the insurance premiums. And I’m not even a citizen yet, just a resident.

      Sure, the quality may be worse, and it doesn’t have the latest treatments and technologies, but the average person is much better off.

      1. Yea the Caribbean citizenship wouldnt be for people who wish to do a fair amount of travel outside of that area. Yea Singapore will likely be fine. I feel like more people should be talking about how China and India are at odds with each other right now. Amazing with how messed up everything is in 2020, that story barely registered with anyone.

        healthcare and college are big problems in America. When I watched these early riots (like when it was legit concerning what was going on in a few cities), I thought, “charging an entire generation tens of thousans of dollars a year, encouraging them to get degrees in useless majors that dont pay off, watch them struggle to find employment, save money, get a house, etc… probably wont lead to the best of outcomes.” But at the same time, watching them trying to derail free markets instead of the Federal Reserve and the massive government failures that led to these inequalirties is a bit frustrating. I’ve been lucky for a Millennial. Majored in STEM programs, got a good job, and was able to move back home with my parents. A lot of kids in my generation dont have that luxury unfortunately.

        I have a slanted view of healthcare in America since I have a great policy. I pay minimum out of pocket costs for treatment for an autoimmune disease and get reimbursed by the maker of the medications. So when I see bills that people get, it’s hard to relate, but yea, healthcare here is a disaster. I cant trust our government to run my healthcare when they couldnt predict a worldwide pandemic that was coming from all sides.

        Personally, I think you’re a bit over bearish on the USA. Sometimes I have to take a step back from Twitter and remember that the dumpster fire I read on there isnt a majority of the country. We have a lot of issues we have to work through. I dont know who will have the political bravery or will power to take some of these issues on.

        One question for you – I read about your portfolio and I have the same hesistations to put more money into the stock market. I thought maybe it’d be best to buy a small number of companies and be able to constantly use a collar option strategy to limit my downside. Have you ever heard of some of these platforms investing in real assets? I’ve seen a couple of them and they are interesting, but I was curious if you’ve come across some of them that sell things like wine, real estate, farmland, etc.


        1. Yup, that is true. I think Twitter is deceptive because it tends to attract the extremes, and the vast majority of normal people do not even use it.

          I haven’t personally used any platforms that offer markets in wine or farmland, but there are many that allow you to buy shares in real estate. Look at CrowdStreet and Fundrise to start with. My experience has been mixed – RealtyShares was pretty bad, and eventually collapsed, making hundreds of users angry, while Fundrise has been good so far in terms of reporting, returns, and generally not losing peoples’ money.

          One possible positive impact of this crisis will be a reduction in the number of expensive-but-useless universities and university degrees. Anyone who pays a huge amount for anything other than a STEM degree, or maybe a few other “practical” areas like accounting, is insane or has a wealthy family.

          1. Thanks for your answer, Brian. I was worried the chaos would resume over the 4th of July weekend, but it seems a lot has calmed down. Still your usual crazies running around, but the focus now is developing treatments for Coronavirus since our people are too stupid to follow simple guidelines.

            One other question I had for you, is about the angel investing you discuss. I took a look at AngelList and liked what I saw, but I dont want to dedicate a lot of money to it yet. I see myself shifting out of the stock market and into real assets given my worry about the stock market, but i still think being in startups could be worthwhile.

            I see WeFunder has a much lower minimum to invest, but it seems their due diligence isnt too high on the companies they help raise money for. Do you have any thoughts on the few brokers that offer angel investing? I would want to build a portfolio of companies so that’s why a smaller minimum like what WeFunder offers would make sense.

          2. I haven’t used WeFunder before, so can’t comment on the platform. But I would be very careful if they’re not properly doing DD on their companies because that’s a notorious failure point for crowdfunding platforms (see: Realty Shares).

            A better strategy might be to invest in some type of fund that includes dozens or hundreds of companies on one of these platforms. Angel List has various funds, but you need to be accredited for even the funds I believe.

            If you can find a platform that has a fund with dozens or 100+ companies in it, that’s a much better idea than picking individual startups.

  20. Brian,

    I’m curious about the decision to renounce your US citizenship versus getting dual citizenship elsewhere.

    1. Dual citizenship wouldn’t be helpful because I’d still have to pay full U.S. federal taxes, so I would be taxed on the same income by multiple countries in that scenario. It’s one of only two countries in the world that taxes based on citizenship, not residency (Eritrea is the only other one… not exactly great company to be in).

      The other issue is that some countries don’t officially allow dual citizenship. For example, Singapore doesn’t allow it, so if I gained residency there and then became a citizen, I would have to renounce U.S. citizenship anyway.

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