My main investments – brain and networking

— At one workshop on investments you said the management have blamed you for losing small amount of money. Why?

 — Yes, that has happened. And it was weird. I was told: “You are too conservative. That is why you both lose and earn less”. Then I asked: “What if I would lose more?” They reacted: “Would earn more”. Admit it is an unexpected approach. However, I faced it many times in my life in different places and with different, wealthy and confident people.

Regarding losses, I can admit I have lost money several times. Unhappy clients came to me, in situations like this I felt uncomfortable and did not know what to do. I could return money to someone – could not to others. Once I proposed to give the money back, the person said: “No, consider it your second MBA”, so it is better to be “grinded” to understand what is happening.

— What do you think of passive investments?

 — There are several types of passive investments. Simple – apartment, deposit or investing in another country. But you need to understand the taxes. In different countries, there is a tax on deposit or percent. In some countries, there is a negative interest rate. Many people want their money to be deposited in Switzerland – beautiful country, but they have the negative interest rate. That is why I would say this: the period of possible passive investments is over. The problem is that in every case the income is equal to the inflation rate. For instance, deposit in dollars with the interest rate of 1,5-2% annually in reliable Russian banks – the most part of the income will be shaded by inflation.

— Open-ended funds, hedge funds and others can be counted as passive investments as well. What do you think of them?

 - Often people what have never dealt with it are confused comparing these products and deposit. This happens on purpose. You see a nice picture, billboards with someone’s plans and hear: “Look, you will earn twice or three times as much”. Everyone is forgetting the important thing – a commission rate of a manager which often takes considerable share of your income.

Besides there is a feature in transferring money for managing. For example, there are shares of a company that are dropping and are worth nothing. Everyone is shocked and trying to get rid of them. Usually your personal manager talks with you pleasantly, gets you tea or coffee, pick you up and maybe even pay for dinner. When it comes to force majeure, when you are calling to close the position and 70 clients are trying to reach the manager at the same time. In this case the manager is reacting to someone who is bigger or more terrifying.

People often call me trying to sell some products. Several times I took part or my relatives or clients did this. I would say that there is no point in it. Much more drama. That is why I would not advise to invest in it.

— Where do you advise to invest in?

 — Probably, Eurobonds of Russian companies. Considering how the entire world does not trust us and how strict selection is, most likely, there is going to be a shortage of demand, Eurobonds will be sold at premium price. You can earn on that.

— Many people think real estate in Russia is s solid option to invest money in. Is that true?

 — Indeed, many believe so. However, before investing, draw attention to two nuance. Firstly, I would recommend to analyze how much square meters are unsold on the market – there is an oversupply. This applies to Moscow, Tyumen and other Russian cities where I have recently been. If something happens to a company, there will be a margin call, the company should sell urgently meters. They will be sold to a strategist which will buy it with discount. If mass media know about the discount, the market if real estate can fall.

Secondly, you will buy an extra apartment. You have two options. Either you pay for electricity, heating and other municipal payments, so this is a liability. Or even the worse option – call for tenants. You can take any amount of money the market allows. However, tenants are ruining the apartment. After two-three years or maybe earlier when they move out, you have to repeat redecoration. Most likely redecoration will cost as much as tenants pay you for that time.

— What about investments in startup companies – do you think you can earn on it?

— For the last years, I researched Russian, Ukrainian and Belorussian startup companies. Mostly, obviously, Russian ones because I live a lot in Russia. Basically, I considered only those I can touch because investing in foreign startup companies, sometimes you do not know what you buy.

There was time when I supervised security service. Once I saw Nigerian oil rigs out of real metal on sand making an illusion that there is oil underneath. Saw a lot of fraud schemes of holding companies and even countries.

Unfortunately, people often come to me only with ideas. The majority has plain thoughts and no team, no clients, no concept.

— Have you invested in startup companies?

 — Many times. Often unsuccessfully. Although there were profitable projects.

— Do you consider physical gold as an investment – gold coins?

 — If you buy a coin, unfortunately there is artistic value except for gold itself. The problem is that it has low liquidity – look, no one is standing in line for the coins. If you purchase and tomorrow you need to sell it urgently, no one will buy at face value. Coins always have liquidity lower than one.

— Tell me, Oleg, do you trade on your money?

 — No, long time ago. I stopped trading on personal money after 1998. Then there were crazy rates, I worked in the company that regularly did that. Saw a lot, understood a lot, had an access to analytics and “right” people. Then profit dropped so it was not worth time.

— Where do you invest money in?

 — Do not want to go into details. Play with deposits of developing countries. I am sometimes asked when they need cash urgently. Provide cash on the security of property – it can be a plane or a yacht. Give three times less than a plane costs, get a solid document. I do not need a plane, but I know that I easily can sell for a half price.

The point that everyone is trying to participate in something. I am always in cash. Make short deals and do not try being an investor or a strategist. My main investment – brain and networking.

— So, you do not invest in for a while?

 — I saw many people losing in the final. I was an analyst, worked with Big Data. Saw the strongest losing their capital. I get enough of my and others’ mistakes not to play anymore.

— What currency do you advise to keep your savings in?

 — I keep money in dollars for a long time. Neither euros nor rubles. I was told that I was not a patriot. Nevertheless, I choose dollars. I witnessed too many graphics and people that put on other currency. Practice shows as a collapse happens, dollar is safe place.

— In your biography, you had moments when you had business. At the same time, you created trading strategies and understand investments. What is beneficial – business, investing or trading?

 — Business. Trading – a badly calculated thing. In any second dollar can change, taxes or laws. On the other hand – business. It is simple. Of course, there are sectors that is not dependent on you. For instance, you work with hookahs and suddenly smoking us restricted – business is destroyed. However, there are more stable sectors of economics where you can plan and risks are understandable. In general, business is an extremely calculated thing.

— Are not investments calculated? Today you invest – in a year you get the same plus the rate.

 — Unfortunately, many people appeal to this logic. It is all because of villains like unscrupulous “guru” and people that promote them. A person from a different country arrives and says: “I have earned so much money doing nothing! I am a parasite! Be a bloodsucker like me!” What do people? Men with money and adult women capable of working invest earned money in pyramids. An illusion that you can earn money quickly but it does not differ from a scheme company. Just like professional players pump profit out of the market.

When everyone is trying to make money out of air rising the value of an asset, sooner or later it will cost nothing.

Author: Oleg Braginsky

Translation: Marina Alexandrova

Source: FinBuzz