I'm No Economist #8: ?? Solving Difficult Problems, A Non-Arrogant Tentative, My Portfolio Update

Welcome to another edition of?I'm No Economist

I'm No Economist?is one of the best ways to get news -?mostly opinions?- on investment strategies, report digests, VC, startups, and innovation.

I've been reflecting deeply on how investors of money, time, and energy can be more efficient when solving really difficult problems, and building long-lasting value and impact.

I'm talking about capital allocators, founders and executives.

This and previous editions are all about that. About learning on the go while creating valuable stuff.

If you are as opinionated as I am and if you know people just like us, share I'm No Economist with them. Let's all be opinionated together.

---

Solving Difficult Problems, A Non-Arrogant Tentative

A few weeks have passed since the last edition of I'm No Economist. Since then, I've been thinking about solving difficult problems and how investing in the right asset classes is the catalyst for that.

I'm not only talking about mathematics and IRR.

It's paramount that the acute investor suffers less than the majority of the market and protects oneself from total ruin. Especially in times of contraction.

I'm also talking about investing in the solution to difficult problems. Investing to build a long-lasting impact on society. A?positive?one at that.

Building for generations is what an investor should be aiming for. It is the investor's responsibility to think 15, 20, or 100 years ahead of time.

Build for their great-grandchildren to have an easier path to solve even more difficult problems when it's their time to do so.

Sure, some of these great-grandchildren will only live off of their ancestrals' wealth. However, they should keep in mind that the education of their descendants is also the investor's responsibility.

While reading the?State of VC Report from CB Insights , it called my attention to the way different regions raise capital for extremely distinct problems.

Explaining very briefly, The U.S., Chinese, and European VCs are willing to make short-term sacrifices to build base industries, put people on Mars, investing in their long-term tech.

While Latam is investing in DTC solutions just because, you know, groceries delivery is a multiple billion dollar market. I mean, another one?

Brazil, for instance, is stuck in the 1830s.

• Brazil has ~30.000km of railroads against ~300,000km of the U.S..
• Our main energy source - although clean -?is 60% dependent on hydropower.
• And?we export most of the commodities used by China ?for them to build their long-lasting valuable goods. We'll need them if we wanted to have important industries in-country.

I'm part of the problem. But I want to change that.

I consider?I'm No Economist?a practical way to publicly learn and build my knowledge on the public and private markets.

I don't have yet a clear investment thesis and however complex it may be to build one, I'm doing it on the go. That's the best way to do it.

I'm sharing knowledge about macroeconomics, and everything I believe can be useful for managers and individuals who are willing to build their permanent knowledge base.

Because when the time comes, I'm sure that the right people will be willing to hop on board and help me solve difficult problems.

---

My portfolio update

It's been a while since I don't write about my portfolio. Since the last time, the strategy didn’t change at all, and I have been still accumulating shares on REITs and researching other deflationary assets.

Before I go on, this is?absolutely NOT?investment advice. Please do your own research.

Here's a quick recap for the strategy for at least the end of 2022:

• REITs (Real Estate Investment Trust):?this is the only new thing for my portfolio in 2022. I've been reading a lot on the real estate investment cycles, and with the rise of interest rates by the FED, I learned that this is the buy year for REITs. For the Brazilians reading, I'm not talking about Brazilian FIIs (Fundos de Investimento Imobiliário). I have no interest in investing in Brazilian securities. This part of the portfolio is made out of ~15 REIT tickers. There is 8-10% reserved in USD inside of this asset class to leverage some opportunities when necessary.
• Crypto:?the apple of my eyes. Even with the terrible results from putting some money in?May 2020 , this part of the portfolio generated 83% from Jan 21 to Jan 22. Not too bad. This part of the portfolio is made out of 20+ cryptos, being BTC the most important one. There is a 5-10% USD reserve in case of opportunities.
• Stocks BR:?made entirely of USD cash reserves. There are no stocks on this portfolio, only the USD optionality once I realize it's time to take advantage of the tanking of Brazilian stocks. I'll probably just buy an ETF here when time comes.
• Stocks US:?made out mostly of USD reserves. I believe that the US stock market has no business being this expensive. Fundamentals are crap, nobody knows what they're doing. I made some mistakes last year by buying gold miners and gold ETFs on their all-time high. But I'm hoping to get at least break even this year or next with the rise of inflation.
• Commodities:?this part of the portfolio is composed of SLV and USD reserves. I'm thinking of spending some of that cash on other commodities, mainly water and others like corn, coffee, and soybeans. But not sure yet. Maybe uranium, oil and other energy sources may be a good idea here.

The strategy consists in having a percent goal for each asset class.

However, these are goals and I try to be flexible and take on opportunities to build a long-term permanent portfolio. Mainly to survive to different parts of the economic cycle.

Right now, I'm seeing more and more allocation into REITs, as Crypto took a turn for the worse this past few weeks.

I decided to start reporting my private investments. I already had an important part of my portfolio allocated to a private equity fund.

Besides that, I'm still bullish on crypto, allocating more and more cash into this asset class.

The news is that I broke into angel investing in the past 2 weeks. I plan to invest in up to 10 startups trying to solve difficult problems.

Here's how it looks right now:

My returns so far this year:

The performance is a bit worrisome, mainly due to the downturn in crypto. But remember, all of these asset classes have cash reserves waiting for bottom opportunities. They may be coming anytime soon, especially stocks BR and US and Crypto as well.

AUM variation:

---

A funny thing happened…

It took me a few hours to write this edition. I wanted to condensate weeks of reflection on how to solve difficult problems in Brazil - you know, like railways, renewable energy sources, healthcare, biotech, education, public security, etc.

While writing it, on the very day I wrote the first section of this post, I received a deck from a friend of a luxury escort website raising a round.

The most comical part is that the company seems pretty solid. Good revenue, interesting LTV/CAC, low burn. ??

It's tempting, and as I said, I'm part of the problem. I'll make an effort to change that.

Subscribe to I'm No Economist to get updates on that strategy.

---

Follow?I'm No Economist?on Twitter

Reading more than 1,000 words may be difficult sometimes. We all have a lot on our plates.

If you want to stay informed with easy-to-digest content from the newsletter, make sure to follow?I'm No Economist on?Twitter .

I recently posted a digest from edition?#7 part 2/2 about the CB Insights' Q2'22 Venture Report.

Check it out!

Talk soon,