HAUKE: Some lessons to share as personal milestones approach

A few approaching professional milestones have put me in the mood to reminisce.

This September
will give me 15 years as a professional in the securities industry. My firm will celebrate 10 years this November. And, because
there are more ways to skin the market cat than that same cat has lives, I thought I would share some the important lessons
I’ve learned in that time.

Let’s begin with my big belief: Modern Portfolio Theory and diversified
asset-allocation strategies do not work.

If it is painfully obvious that an asset class is about to tank for more
than a few months, then why own any of it? Buy-and-hold theory finds its fatal flaw in the fact that General Electric is the
only remaining company on the original list selected by Charles Dow.

I have owned three assets over the last 10
years—my house, gold and my company. Money management has proven to be a great business, plus I love it with a passion
rivaled only by the love I feel for God and family.

Gold also has worked out well for me. I bought my first gold
coins when my first child was born 10 years ago. I bought them for him thinking they would make a cool gift after he graduated

At the time, I didn’t think much about the long-term return power gold would end up showing over
the next 10 years. When my son Will was born almost eight years ago, I bought more coins for him. I still didn’t give
a lot of thought to the investment power of these coins.

My average cost on those two purchases was about $270
an ounce. I have bought more gold since then, but all subsequent purchases were intended for investment purposes. This means
that, at some point, I will sell them. Again, there is almost nothing I want to keep forever. Gold did well during the bear
market last year and even now is closer to its 52-week high than any other asset class. I believe it still has at least a
few good years in front of it, with the potential of something spectacular happening within five years. But, there will come
a time when I sell.

My house has taken a different path than my other long-term assets. We bought it 10 years ago
for $225,000, and at some point it may have been worth $350,000. I could probably sell it today for $305,000, so that leaves
me with a gain of $80,000. This is a little under 4 percent a year, not taking into account money put into the place.

The last few years have forced me to look at the house as a consumable object. I have three boys who stress the house a
bit. Real estate prices may be approaching a bottom, but I don’t expect them to return to double-digit annual advances
for several years, if at all. We will simply continue to live there and, if we have any gains after we sell it in 20 years,
that’s fine.

In addition to the first idea about buy-and-hold theory is something I’ve learned regarding
leverage. Aggressive leverage can be useful during major turning points, but then only for short periods.

term, highly leveraged plays greatly reduce an investor’s flexibility. With taxes and government regulations around
the world more likely to go up than down over the next 10 years, flexibility will be one of the keys to long-term success.

I sincerely appreciate all those who supported me over the last 10 years. My hope is that you truly understand how
grateful I am.•


Hauke is the CEO of Samex Capital Advisors, a locally based money
manager. His column appears every other week. Views expressed here are the writer’s. Hauke can be reached at 203-3365
or at keenan@samexcapital.com.

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