A few years ago, at a Cato event, Your Survival Guy and Gal had the great pleasure of sharing a table with billionaire investor Jeff Yass, among others. All was going swimmingly until the keynote speaker, investor Ken Fisher, took to the podium and told the room his net worth was more than everyone else’s combined.
Way to ingratiate yourself with the room, right?
During the Q and A Fisher made some comment that he was one of the most successful people in the history of America. Yass took issue with that and when Fisher asked him to name someone more important said, “For starters, Thomas Jefferson”. Fisher’s comment about his net worth and self-importance could not have been more off-base.
Which brings me to Jeff Yass and his excellent editorial in yesterday’s WSJ. In his piece, he explains how the investing class gets blindsided by inflation. (You can see it here).
Plain and simple, inflation is a monetary event. Those living paycheck to paycheck see it monthly, while the investing class doesn’t. They see their increase in prices as wealth. That’s a mistake.
Because many in the investing class believe they’re wealthier and live life accordingly. But a portfolio that was $1 million and is now $1.2 million is not a product of productivity gains, it’s from inflation. It will cost the wealthy investor $200k or more over a lifetime for vacations to Paris, second home repairs, country clubs, and home remodeling to name a few.
“Hey, Survival Guy, what’s your point?”
Instead of looking at portfolio prices and their wealth, they may want to consider taking a disciplined approach to their spending habits.
Action Line: Here’s an exercise for you: Once a year, grab a napkin, jot down what 4% of your portfolio is, and don’t spend a nickel more than that. And if you can save that extra cash in good years when “prices” are higher, then do it. Better yet, buy an eclectic mix of Your Survival Guy-type stocks—those that are the bedrock of the economy and tend to be dividend-centric. When you’re ready to talk, let’s talk. I’m serious. Are you?
Originally posted on Your Survival Guy.
