Thread by @TihoBrkan

1/ After many requests I have decided to focus today's weekly summary towards unveiling the curtain a little bit and showing you how I've invested my personal money, as well as the capital of my clients for the last 3 years.

2/ This should be quite interesting to a small sample of you, most likely not believable to the majority of you and irrelevant/boring to the rest of you.

All criticism, feedback, jokes and other comments are welcome. After all, this is FinTwit!

3/ Before I start I admit that it's hard for me to tell you exactly what my true rate of return was in those 3 years. The reasoning is that I am constantly saving as much income as possible & reinvesting it so that it can compound as fast as possible & for as long as possible.

4/ Another reason is that I invest more than 70% of my portfolio in alternative assets.

These are illiquid assets held directly or indirectly, at times with the high cost of entry & exit, that are held for year(s) at the time. It's not easy to calculate an annualized return.

5/ But since I've done basic calculations over the years, removing my contribution impact (savings) as best as I can — which can be meaningful at times if I earn a big performance bonus — I have managed to achieve over 26% per annum over the last 3 years running.

6/ As I've stated many times, my target return is at least 15% compounded. That means I should be doubling my money every 5 years at the minimum, quadrupling it every 10 and octupling it every 15 years.

Know your compound interest and learn it well, as Albert Einstein said.

7/ My portfolio is run as a family office strategy. Not the kind where famous managers have closed funds & opened family offices to bypass regulations.

But the kind that would be run by a family that made wealth outside of markets and runs a true globally diversified portfolio.

8/ True global diversification means various asset classes in different jurisdictions & continents of the world (mainly N-America, Europe & Asia Pacific), some public & liquid, others private & illiquid, with short or long duration, some held directly & others held indirectly.

9/ My portfolio usually includes the following assets:

— US Stocks
— EAFE Stocks
— Asia ex-Japan Stocks
— EM Stocks
— Global REITs
— Individual public names across world exchanges (my own ideas & 13F smart money ideas)

10/ My portfolio sometimes (not often) includes:

— US Treasury Bonds
— International Treasuries
— Inflation-Linked Bonds
— Investment Grade Bonds
— High Yield Bonds
— EM Debt (USD & Local Currency)
— Public Bank Loans

Rarely do I hold these bonds unless the yield is attractive.

11/ Tweet 10 & tweet 11 make up the majority of my public asset book. Most of the assets are usually either in equities or cash. I rarely invest in publicly listed fixed income because it will be very hard to achieve my target of 15% per annum.

12/ Furthermore, I also apply leverage on top of my public book that is similar to a portable alpha strategy (not exactly the same but similar).

So while I am running equity positions at 100% invested, on top of that I use leverage to run an absolute return (trading) strategy.

13/ This is when I put my trader's hat on, and my investor's hat off. My trading strategy is a high turnover with a duration of 5 to 30 days aimed at trading technical inflection points when security is about to break resistance or support.

14/ A huge amount of energy, focus, emotional control, meditation, risk management, self-awareness, and mindfulness goes into this strategy to make sure I don't incur a big loss and walk away with either a small loss, small win or a big win.

15/ So the public side of the portfolio is mainly equities, sometimes fixed income & on top of that a leveraged portion used for trading with sharp discipline on risk management.

Now, let's focus on the remaining 70% plus of the portfolio.

16/ My alternative portfolio usually includes the following assets:

— directly held equity in single-family real estate (core, value add or development strategy)
— indirectly held mezzanine debt or preferred equity in development projects
— equity in multi-family real estate

17/ Before I continue, let me give actual real-life examples, some of which took part in & others which I decided to skip.

Fantastic development in Gold Coast Australia where a developer with a 100% track record is paying 18%pa over 2 years for mezzanine debt (36% total return).

18/ A famous chateau in central France, turned into a golf & spa resort & later expanded by the developer for additional holiday condos sold to the public around the golf course.

I already reached an exit here for 16% IRR, denominated in USD during a period EUR was sinking.

19/ First grade "A" commercial building was constructed in a small town on the border of Poland & Belarus. I invested during the last stages of completion (meaning much lower risk). Already exited for 15% IRR. The building leased out the first Starbucks & PizzaHut in the town.

20/ In the booming Saigon Vietnam we (some clients & I) purchased multiple condos in a development located in the area of Thao Dien (D2) — where expats & foreigners live. On Completion of the condo, valuation rose by some 30% and still yields 8% per annum for me.

21/ In London and other parts of south UK, together with some clients, I've invested in developments which I cannot disclose that are being contracted by developers with very solid track records and returns on the exit of 23% IRR (46% total return over 2 years).

22/ A project which I did in Prague, Czech Republic. Sourcing the deal, planning & designing the project, doing on the ground negotiating, outsourcing all the materials & general day to day management.

Purchased in shell & core in a brand new restored heritage building.

23/ Renovated for an exit but also had the potential for a re-finance exit & renting option, too.

Who says investors cannot be interior designers? Loved the style & so did the market. It achieved a record price per m2 on exit (cannot disclose more at this point). Pictures below.

24/ I've actually gone and built a map for you guys showing all the recent real estate investments I made around the world over the last 3 years, as well as the current opportunities I'm looking at.

I'm not talking about paper REITs on the exchanges, but actual REAL estate.

25/ Why is this important?

Because, unlike public markets, real estate has true uncorrelated benefits. Have you noticed that in the last 2 years Australia & Canada are declining in value? Well... Portugal, Croatia and Czech Republic are rising in value.

26/ Firstly, while Sydney & Melbourne are declining, Brisbane & Gold Cast are either flat or still rising in superb locations. Diversification.

Furthermore, around the same Australian prices started falling, property in Croatia started rising and Portugal continued booming.

27/ When someone tells me global property prices are falling, I understand straight away they have no clue about real estate.

There is no such thing as global property prices or even country prices. Each city, even each district or street can vary to another each year.

28/ This is why I love investing in property so much and it makes a huge part of my portfolio.

It's true diversification. Correlations don't go to 1 during downturns. Superb locations don't even fall a lot during downturns. And finally...

29/ Returns are at least double or triple that of the stock markets.

It is possible to make 15 to 25 percent by doing things indirectly (someone else does the deal, you finance the capital). And it is also possible to make 100% or more if you're going to do it yourself.

30/ I admit there have been amazing investors who have done something similar by picking great businesses, which are growing like weeds. The returns have been mind-blowing.

That is why part of my overall portfolio holds 13F ideas these smart cookie hedge fund guys pick & hold.

31/ But generally speaking, the volatility that one needs to go through to achieve these returns is insane.

To hold Apple, Amazon or Tencent since the start has been a wild ride, to say the least. To hold Microsoft from 2000 until 2012 as it hard as it was dead money.

32/ In contrast, property risks are very low (*if you know what you're doing*), volatility is usually calm and the tax advantages are incredible.

Real estate risk-adjusted returns, especially because property utilizes leverage so well, are off the charts.

33/ People here are talking about whether buying US stocks today is a good idea. Whether they are going to return 2% or 6% over the next 10 years.

In my opinion, that is a waste of time! Let me show you how 2 European partners are making 100% yield annually in real estate.

34/ On my recent trip to Bali, while staying in Uluwatu I got talking with two business partners (Spanish & Brit) both of who leased an amazing LUXURY 6 bedroom house from an Indonesian owner for 5 years and paid him $150,000 (30k annually).

35/ They are now renting this amazing oceanfront, cliff side, blood orange sunset, Instagram perfect house for $1,500 USD per night ($250 per bedroom).

Here is the maths guys: they need 20 nights 5.5% occupancy in the year to break even. They achieve over 35% occupancy.

36/ At 35% occupancy that is 128 nights or $192,000 of gross income. After costs and taxes, they are making $150,000 annually or 100% yield!

They paid off their investment in the first year and now are doubling their original capital every year after that!

37/ And there is basically no risk, no leverage, no volatility, no effects of a trade war, no need to watch gurus on CNBC.

As a matter of fact, if they were to pay these Instagram influencers to market the property, their yield could jump to 200%.

Yes, 200%!

38/ This is how the rich invest money.

They hold private businesses, private real estate, co-invest alongside developers, they also hold public index funds & big stock market names, they make loans to small & medium size fast-growing businesses so they earn 20% annually.

39/ There is more to investing then S&P 500, FANGs & the Treasury Bonds that Bloomberg, CNBC, FoxBusiness, and others would like you to believe.

If you found this interesting and would like to know about how I work with clients, don't hesitate to private message me.

40/ Regards from Prague, where the beer is amazing and real estate continues to boom.

Hope you enjoyed this weekends 40 post thread. This one I'll pin and leave there for a while.