Investment Strategy: Getting Wealthy Vs. Staying Wealthy

 |  Includes: FRI, GLD, JJE, MOO, REZ, RJN, SLV, XME
by: Ben Mountifield

This article considers two different investment strategies: One for those that want to get wealthy, and one for those that want to stay wealthy.

It goes without saying that the investment strategy of someone looking to make a lot of money is going to be significantly different from that of someone looking to preserve their wealth for future generations.

First let's consider the asset allocation of someone looking to make money.

Chart 1: Asset allocation for getting wealthy

Click to enlarge

As I have argued before, those looking to make a great deal of money must identify a secular trend, and follow that trend until it comes to an end. The dominant trend today is that of currency debasement as a remedy for faltering economic growth and chronic indebtedness. As this trend continues, I expect precious metals, and the companies that mine them, to continue to benefit.

Another macro trend we see is that of energy scarcity, which is likely to drive up the price of oil, natural gas, and the companies that bring these vital commodities to market. Other assets I am bullish on, though to a lesser extent, include, uranium mining stocks, agricultural commodities, diamond mining stocks, and graphene companies.

For those looking to make a great deal of money, the generally accepted principal of having a diversified portfolio does not apply. Instead they must take a greater degree of risk by concentrating on one or two asset classes.

For those looking to preserve their wealth for the long-term, however, portfolio diversification is key.

Chart 2: Asset allocation for staying wealthy

Click to enlarge

Throughout history wealthy individuals and families have relied on four core assets to keep them wealthy. These are prime residential property, gold, land and fine art. They also have a tendency to hold part of their wealth in natural resources and collectables such as classic cars.

Regardless of whether you are looking to get wealthy, or stay wealthy, every investor needs to understand the powerful macro trends that will shape our future.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.