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Make Your Cash Work For You

Top 5 of the Week of March 28

With the economy as it is today, we head up the start of this week’s Top 5 with an in-depth article on the voice that Jody Chudley, of the Daily Reckoning, would have us listen to; former hedge fund manager, Stan Druckenmiller. You can also discover how to boost your cash position potential according to Mike Schellinger from Old School Value. And while those huge financial scoops seem like an investment win, Nocturne Capital’s Dr. Daniel Crosby suggests that you may need a different strategy.

For those facing the scary prospect of retiring at the start of a bear market, Alexander Green of The Oxford Club has four steps to follow which arm you in advance. And we close this week with an optimistic view for the future, Morgan Housel (The Motley Fool) has us questioning whether we have made some breakthroughs in the investing industry…

The US’ Unsustainable Economic Path

  • With no hidden agenda or gain in mind, Druckenmiller warns that the US faces future economic disaster trying to support a retirement generation while not having a workforce to fund it
  • His epic track record of 25 years straight without loss at an annualized rate of return of 30%, testify that we should perhaps pay attention to him
  • An unsustainable path lies ahead, if current tax rates continue, US debt would multiply by 20 times over to $211tn from $11tn
  • For a secure financial future, plan ahead and invest for number one—yourself—rather than look to the state for support as it may not be able to supply it

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Tell us your thoughts; is the US headed for disaster or has Druckenmiller misread the signs? Share your comments in the section below.

Make Your Cash Work For You

  • As a retail investor rather than a fund manager your cash is not chained into investments at all times so you can maximize it’s potential
  • Be strategic and patient, just because you have cash doesn’t mean you need to deploy it—manage your cash position with discipline and the returns will pay off
  • Utilizing cash wisely will benefit long-term returns though it’s difficult to take the required contrarian view at times

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Don’t Let Your Returns Go Down The Drain

  • While risky financial wins are more remarkable, it is not a strategic way to invest; the mark of a successful investor is by not losing
  • Compare two portfolios: same starting value and average return; the one with larger variance will result in lower total return (known as the variance drain) so mind the volatility in your holdings
  • Concentrate on managing portfolio risk instead of trying to choose remarkable investment winners for greater portfolio return

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How to Take On A Bear Market in Retirement

  • Being forced to sell off investments from your portfolio too soon won’t leave enough shares out there in the future chance to recoup as the market recovers; a period on average of “3.1 years”—though history suggests otherwise, with “almost 12 years” being the longest case
  • Before retirement, store in cash—but don’t spend—a backup of one to three years salary; then act according to which market we’re in at the time
  • While navigating a bear market in your retirement won’t be easy, look after your portfolio first and foremost and it will look after you

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Breakthroughs in the Future of Investing?

  • Breakthroughs disobey the rules we set in stone—our conventional wisdom (CW)—and alter our perspective of the future
  • CW: we make bad investment decisions by ourselves—breakthrough: baby boomers invested differently to their parents and made informed investment choices, future looks brighter still
  • CW: financial advisors’ income is huge—breakthrough: ETF competition focuses on offering lowest possible fees, so perhaps we are on the way to a future where advisors are paid fairly?

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Top 5 of the Week is a summarized collection of financial investment articles that we like and think you might like too. Having written thousands of pages of equity strategy and company research between us, we understand the allure of the ever-changing world of finance. Investing is an art form – and like everything, something you can work on and improve at. There are some excellent writers out there on the finance web, some offer a running commentary on today’s market, some are doing research, some have tips on how to Become a Better Investor, and some just lift the cloud of fog behind a lot of financial jargon. Each week we will keep you up to date with the top 5 articles worthy of your attention.


Anything you would like to discuss about this week’s top 5? Do you have another favorite that isn’t mentioned here? Feel free to add it below. Let’s start a discussion in the comments section!

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DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article. The Babinow Team doesn’t necessarily endorse any stocks or shares mentioned in the articles or the author of such articles linked to and summarized in Top 5 of the Week and cannot guarantee the accuracy of its information.