Investment Newsletter for the end of March, 2022

The market was fairly flat in March. Up a bit. Quarter was down a bit.

The other day Daniel got a Facebook advertisement for investing in limited partnerships in farmland. The advertisement claimed superior rates of returns. Daniel doesn’t know “squat” about farmland. Then he received a similar advertisement for shares in wine collections. Again “squat”. How about flipping houses? Incompetent with tools. How about virtual currencies? We doubt anyone has much of a clue. Our point is to invest in what you understand.

In terms of investing, what is the value of knowledge? We assert that knowledge informs you what you should invest in and helps you evaluate financial planners. There are many ways that you can invest your money. There are traditional things such as stocks, bonds, and real estate. There are also more esoteric things such as cryptocurrencies, paintings, and NFTs. How do you decide what to invest in? Our investment philosophy is that you should only invest in things if you understand them. We have 2 reasons. 1. Without understanding you can’t differentiate between a good investment and a bad investment. 2. Without understanding you will be a magnet for scammers trying to get your money.

One investment idea that is fairly common in the investment world is that you should stay within a circle of competency. If you invest in something outside it, you are pretty much guaranteed to be confused and confused people make bad investment decisions. For example, we don’t know anything about farmland. It is outside our circle of competency. If we were to invest in farmland anyway, we would have issues. We don’t know how to evaluate the quality of the land, what a good price is to buy, a good price is to sell, how long to hold the land for, etc. Without knowing the answers to those questions, we would have to guess. If we’re guessing, we are very likely to make a mistake.

When you’re trying to enter an area that you don’t understand, scammers can smell your ignorance. Using lies and overly technical language they are going to try to sell you an asset for you to invest in. Because you don’t understand the investment, you won’t be able to evaluate if the asset being sold is good or bad. You are completely dependent on this other person’s honesty and sense of decency. Also, sometimes a seller can be honest, (they think the product is great), but the seller is also very dumb. You need knowledge to be able to evaluate the situation. The reason why we emphasize education so much in these newsletters is that we want you to be able to make an informed decision. That way you will be happier with how your portfolio is invested. In the long run, both you and the company will be happier and more satisfied.

If you have any questions about your investments (or your tax), please call at any time. We sincerely hope you got value from this newsletter. We appreciate your business and trust.


Daniel and Eli

As we’re writing these to help our readers, we would be very appreciative of any input in regards to what we should write next. If you want us to write about a particular topic, please contact me. Please contact me if you would like to submit a post to our blog.

If anything that we mentioned above interests you, please consider downloading our free e-book. The book contains our thoughts on investment management and some information that we think everyone should know. You can also download it below.

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