Focus on Proven, Weathered and Not the Shiny Investments

gold bars

Are you looking for an adrenaline rush or do you want to create lasting generational wealth?

Sticking to what works is generally a sound investing strategy, but that doesn’t stop investors from continually chasing the next big thing.  How often have you heard something like this? “If you had invested $10,000 in Apple’s IPO in 1980, your stock would be worth $6,756,400 today.”

The problem is that hindsight is 20/20.

What nobody tells you is that hitting a home run like Apple, Google, or Amazon is a crapshoot.  For every Apple, there are a million pets.com.  Investing in Wall Street is mostly speculative and amounts to nothing more than gambling.  Even experts like venture capital firms, where looking for home runs is all they do, fail 90% of the time.

Chasing shiny objects is second nature and nobody is immune to it – even big corporations.  How many times have companies abandoned what works for them for the next big thing only to have it blow up in their faces?

Here are some famous product flops to remind you:

New Coke (1985)
Amazon Fire Phone (2014)
Microsoft Zune (2006)
Cheetos Lip Balm (2005)
Clear Pepsi (1992)

Warren Buffett is the third wealthiest man in the world, but he’s never been known to chase shiny objects.

He’s famously turned down early opportunities to invest in Google and Facebook, but he’s never regretted those investment decisions. That’s because he lives by one simple rule. “Never invest in a business you cannot understand.” Warren Buffet understands that if he made it a habit of investing in shiny objects, sure he’d hit the occasional home run like Google and Facebook, but most of the time, he would fail – 90% of the time most likely.

Warren Buffet’s not a gambler and investors who are continually chasing the next big thing are doing exactly what he avoids – gambling.  The financial news is continuously touting the next big thing because that’s what sells.  They traffic in what’s exciting and new – not what’s boring.  The headlines, news feeds, and ads are flooded with talk of crypto, blockchain, gold, precious metals, ETFs, blah blah blah… but, very few of those investments will make you wealthy.

Warren Buffet invests in the stock market, but he doesn’t speculate.

Buffett invests in only dividend-paying stocks.  Dividend-paying companies are usually older and unsexy. Still, the one thing that sets them apart from the IPO companies is that they’re profitable and typically have been for a long time.  Warren Buffet sticks to what’s proven and weathered.

You know what is weathered and has proven its worth for centuries?  REAL ESTATE.

Institutions and ultra-wealthy investors have always allocated a large portion of their assets to commercial real estate. They’re not looking for the home run. They’re not interested in those isolated adrenaline rushes.  They want to win the World Series, and they’re happy to do it hitting doubles and triples instead of the occasional home run if that means winning in the long term.

Commercial real estate is boring. True. What’s also true is that commercial real estate offers consistent income AND appreciation – all backed by a tangible asset and uncorrelated to Wall Street and the broader markets. What’s more, real estate is easy to understand — no getting lost in the details of complex investments and financial instruments.

Here at Four Peaks, we like to stick with proven, weathered investments in the mobile home park segment of the commercial real estate class.  It may not get any more unsexy or boring than mobile homes, but like a loyal dog, mobile home investments will never let you down.

Because they’re unsexy and boring, mobile home parks are often overlooked in favor of shinier objects that usually prove more fool’s gold than fortune makers. That’s fine with us because it allows us to find bargains – bargains that will be cash cows for years to come. That’s because they just ain’t building any more of them because of the stigma and strict zoning laws. That’s to our benefit as well because no other segment can match its income stability in the face of economic turmoil.

If this is what boring means to the bottom line, then sign us up!

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