A billionaire’s strategies for gold, yachts and stocks

I’ve got a treat full of insights and real-world strategies from a very different kind of investor than the retirees I’d mentioned earlier.

The write up comes directly from an email I got from an an avid reader of TradingWithCody, an old friend of mine whose net worth, after having taken two multi-billion dollar tech companies public in his lifetime, runs over a billion dollars. He talks about his own strategies with physical gold, offshore accounts in Switzerland, and what he would do if the entire communication and financial and political systems of today were to stop working. The whole of it is is very important and insightful.

On with the billionaire’s juice then, with his permission sans his name.

Cody,

I liked your recent comments on gold but was a little surprised that you didn’t mention the Jr. Gold Miners $GDX. Personally I sold all my $GDXJ about 6 months ago and went into $GDX.  I just felt it was less volatile.

I hold market based $GOLD securities not for growth or yield but as a hedge against a major market swing caused by an exogenous event that we can’t anticipate. I also hold physical gold in an offshore account in Switzerland. I started that as a way to pay for my yacht when it was traveling Internationally. I bought physical gold at $888. Probably around 2006. During the ensuing years it rose and then fell but after taking out over 3 million dollars, to fund vessel operations,  I still had more than I started with.

Holding gold in Switzerland was an easy choice.  As you probably know, Switzerland pays no interest on holdings although they will allow you to hold cash in any specific currency you wish. If they manage your money they typically charge between 1 and 1.8 basis points. HOWEVER, if you hold it in gold, the management fee is .25 basis point or less. It’s simply the cheapest way to hold money offshore! And yes, I report all my foreign holdings, always have. I don’t do it for tax reasons I do it for asset protection, which is a long story in itself but it’s the primary holdings for a Cook Islands asset protection trust that I’ve been the principal of since the late 90’s.

I tell you this because it is an interesting supplement to your ideas on how and why gold. In my case the holdings represent about 10% of my liquidity holdings, ( a description I use for assets than can be liquidated within 72 hours should that be necessary…..and provided that digital networks are still operational.)  I do hold a much smaller amount of gold and silver coins that don’t even get calculated into the equation but are available should that ever be necessary……which I sure hope is never the case.

Life continues to be great. My wife and I are very physically active and have a 2 year old grandson and another on the way. Our kids are deeply engaged in activities they love and are surrounded by friends and much stimulation.

My portfolio has great diversity, I sleep well at night, fly my personal jet and a sport biplane whenever and wherever I want and continue a life of basic good health, societal contribution, and fun. Private equity is about 25% of my overall holdings and a basis for all of the 25% of my time I dedicate to “work.” I’ve found that to be just about the perfect balance. 75% to philanthropy, family and fun and the rest to the intellectual and mentoring pursuits that have driven me over the last 35 years.

Keep up the great work Cody. I hope that family life and your efforts with Scutify are keeping you busy and satisfied. A good mix of activity changes over time and during the career years I always found it a  struggle to manage family interests amidst my career, my recreation, and my spiritual pursuits. There was simply never enough time to do it all.

Only these last 10 years after I had 2 successful IPO’s and fully grown children did the balance finally seem to come to a sort of stasis. Maybe, if there’s any value to getting older, its the rear view mirror provides a view with a smile, the drama has been vastly diminished and time with family and friends has clearly moved to the forefront.

Make sure you share the other worldly sentiments with your followers. They’ll relate! Managing money is an integral an important part of your focus but let people feel the humaneness of the experience, after all we all want spiritual fulfillment (and I’m not talking religion necessarily) and sharing stories of life and your observations in that domain amidst the financial commentary will ring true for your followers.

All the best to you dude,

L

PS: I bought a fair amount of Volkswagen about a year ago about the same time as I bought my 2013 Porsche Carrea S. I followed the VW/Porsche buyout story a few years before with great interest and I currently see great design being deployed in the Volkswagen line, obviosly influenced by Porsche. And guess what, it’s been one of the best performing securities in my portfolio. Sometimes simple observations are the best…….it was how Peter Lynch became one of the best money managers the world had ever seen, and I’ve been a fan ever since. I have a money manager friend in SF that publishes weekly comments about that field, in almost every case he sites observations that are truly insightful…..I’ll share some with you soon.