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Setting Budgets + Saving for Black Swans | |
How to Open My First Brokerage Account | |
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Also Coming Soon - a series on #HowtoInvest. People have been reaching especially after the spikes in Gamestop, AMC, and other stock to learn the basics. I self taught myself how to invest beginning at the age of roughly 18 and have never stopped. To be a good investor and ensure you are not gambling (speculating), I'll cover (hardest parts of investing in RED):
Budgeting 101 - How to Fund Ur Investments?
Why Stocks as an Investment?
What is Ur Investment Profile + Personality?
How to Pick Stocks?
When to Buy Stocks?
How to Enter My Trade?
How Many Stocks Should I Own?
When to Sell Stocks?
Am I Speculating (Gambling)?
SPAC Alert:
Remember that example I gave you of how people pool money together to pay for things like a vacation. Well there are many ways my friends on Wall Street do this exact thing to buy companies that make them wealthy. They create companies called: Private Equity, Venture Capital, or Hedge Funds. The companies pool money together like we do except they ain't paying for a big vacation rental home. They pool their money together to buy a stake in babies, or 'infant' companies, that are still growing. Just like watching an infant grow, venture cap firms buy infant companies in hope the companies grow fast. This results in venture cap or private equity firms getting paid when the company goes public. This is like when the baby grows up and becomes and adult at 21. If a company goes public this is the perfect exit plan for venture cap investors.
Remix Rewind: So to summarize for us regular folk: You buy something when young, like a baby and take care of it. Then you sell it when it officially becomes an adult. Who buys it then? Well, once public regular folk like you and me CAN FINALLY buy it on public stock exchanges. Take Coinbase, some investors have described making 100x on their investments like my buddy Garry Tan's firm Initialized Capital did.
So why can't we all do this: Because us regular folk usually don't have access or are not considered qualified from an investment standpoint. Yep there are some rules that say you need to have a certain amount of money available to invest with venture cap firms.
To slightly level the playing field, investments called SPACs are becoming popular again and offer us regular folk a way to invest in younger companies. They are simply another way to pool money together (or raise capital) for investors who want to acquire companies that want to go public. Buckle up for a bumpy ride as many SPACs are unproven, high risk high reward investments. The trick is when I buy a SPAC, I don't know what company I will be getting. I am betting on the person who is organizing the SPAC to find a good company. So this is like me pooling our money together and you trust me to find the best beach destination for our vacation trip. You don't know in advance where we are traveling to.
How to deal with High Risk: I like to maintain a small position (roughly 1-2%) in my portfolio. We call this risk allocation and we want to take smart risks. This is like buying a lottery ticket...but I think your chances are bit better in winning.
Here is a breakdown of a few SPACs I own bought companies:
SPAC Investment I Bought: Reinvent Technology Partners
Public Company I now Own: Joby Aviation (JOBY)
Why I May Hold This High Risk Investment: Electric Aviation Firm (think air taxis)
How is it Doing: Joby was recently trading under $10 dollars but is now up to $12. I now have a small gain on this lottery ticket.
SPAC Investment I Bought: Vesper Healthcare Acquisition Corp
Public Company I now Own: Beauty Health Co. (SKIN)
Why I May Hold This High Risk Investment: This CEO of SKIN, has the leader of Allergan, the maker of BOTOX. In the social media world of today, I think people are gonna spend big dollars to look young and healthy. I like to reinvest with people that have made me $$$ in the past. That's the power of the Mansa Musa network.
How is it Doing: I now the proud owner of SKIN which makes HydraFacial or a spa-like treatment to to cleanse, extract, and hydrate the skin.
Major Bag Alert: SKIN is officially a 1 Bagger, my small lottery ticket has already doubled:
SPAC Investment I Bought: Concord Acquisition Corp (CND)
Public Company I now Own: Per a press release, I WILL be the future owner of Circle, a cryptocurrency exchange like Coinbase which made a lot of people bank (pun intended)
Why I May Hold This High Risk Investment: I do believe in the uses cases for Crypto because I own stock in Gold/Gold Companies and its to store value during times of deflation and inflation. So this is a good lottery ticket for the future.
What To Expect:
- Circle Internet Financial Inc one will go public and be worth at $4.5 billion.
- Expect the deal close in the fourth quarter. (Like turning 21!)
- The company will be called Circle and trade on the New York Stock Exchange under the symbol CRCL
- Circle issues and maintains a stablecoin known as USD Coin, a cryptocurrency that maintains an equal value to the U.S. dollar (think digital dollar...more research needed)
- Finally, I learned on of my A-Billi Squad billionaire buddies is in this investment as well. Dan Loeb, billionaire, who heads Third Point LLC is along for the ride.
To conclude, you can buy CND now or wait until the deal is closed in the 4th quarter when Circle (CRCL) will begin officially trading and use this trade an entry into the crypto space.
I will do another post on the risky SPAC plays I am buying up and hope you share your thoughts.
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