I have been checking out the net worth profiles on a dozen finance bloggers. Their new worth range from $300,000 to $2,000,000. Most of them achieve their net worth by being frugal. At least 50% of their net worth are coming from home equity. Most of them have some sort of dividend portfolio. They all claim to be expert in personal finance. But the truth is, they are all idiots.
They completely missed the single most important things about money. Money in and of itself has no value. It is the value that it can change at a particular time and a particular place that really mean something. In other words, the buying power of money defines its value. I was reading about this one blogger from Canada who has a net worth close to $2 millions dollar. He was holding a few properties in the biggest housing bubble in history, he has a dividend portfolio full of high yield real estates ETF. He calculate his net worth growth based in Canadian dollar. I was shaking my head as I was reading his math in his blog, just like the way I shook my head when I was grading the math assignment when I was the math teaching assistant back in University. He doesn’t have a slightest clue what he is getting himself into and how much risk he is in, in order to get that return.
From an engineering perspective, finance and economic theories are like witchcraft from Harry Potter. They are nowhere near how the world actually work and I have no idea why they train a whole army of university student with such non-sense. The Canadian blogger has no idea why he is doing because he has absolutely no control of the return of his portfolio and he has absolutely no control of the risk. Based on his calculation, he was up a certain per this year. Little did he knows that if he account for the currency risk, he was already deep in the red sea. The Canadian dollar dropped like a stone as oil price plunged. The total sum of his properties and dividend are all down 30%. I also browse through his dividend holdings where many high yield stocks are already in the red in terms of current price. And don’t get me started with the ETFs, they are all ponzi scheme ETFs where the fund is relying on new buy in to support the high dividend yield. It’s going to make headlines when the housing bubble unwinds.
So this “Successful” investors lost 30% of his net worth in just 3 months in 2016, put all his eggs on the housing marketing in Canada in real estates and real estates related ETFs, he also purchase a whole portfolio of dividend stocks at stratospheric P/E level. I don’t understand why he bother to “diversify”, he is probably better off just buying more properties. He think he is diversifying but in reality he is just placing the same bet with different instruments.
He reminded me of another blogger from the States. She is known as the money diva. She made a killing in the real estate boom during the 2005-2006 run up, and miraculously she managed to sell all of her properties at close to the peak of the boom. All is good, right? WRONG. Here is the kicker: Based on others’ ADVICE, she took all the proceed from the sales and went all in buying the SAFEST stocks at the time – BANKING. She diversified all her money into a well balanced dividend portfolio of bank stocks. : )
They are no investors, they are all gamblers with a hot streaks. They all think they have control over the casino games, they all think their “skills” has something to do with their “success” until they give it all back to the house.