Take a stroll through London’s historic Leadenhall Market in the City of London…
And you’ll eventually stumble upon this pub, The New Moon:
Whilst most people will be allured by its striking wrought iron architecture…
They have no idea that this pub harbours a secret.
On the surface The New Moon is like most pubs within London’s Square Mile.
On most work nights, you’ll see city workers – pint in hand – spilling out of its doors.
But The New Moon is slightly different.
Because this pub is one where some of London’s richest bankers come to celebrate when they’re told how many zeros are on the end of their annual bonus.
And if you want to know how much they’re making…
Head downstairs to The New Moon’s cellar bar. You’re likely to hear to some loose tongues, and your jaw might just hit the floor.
You see, over the last few years, these guys have had to contend with the exact same financial challenges that you have.
A sliding stock market… Raging inflation… Rising interest rates.
Yet despite that, these guys are STILL making money hand over fist. And they’re not shy about it.
As one bartender at The New Moon told The Guardian:
“They come here to celebrate when they get told their ‘number’ – the numbers seem to have been particularly obscene this year.”
“We have had quite the run on champagne – the poshest champagne we stock.”
These guys are raking in big bonuses because DESPITE the financial turmoil, they’ve been able to keep their clients’ money growing.
In fact, over the past 18 months, while the majority of investors have LOST money…
Many financial institutions are making record profits:
“Citadel breaks records with $16bn profit” – The Financial Times
Which begs the question: what’s their secret?
We all know what the financial establishment will try to tell you.
That there is no secret. That as a regular everyday investor, you’ve got no chance of beating the market.
And that you should simply lump your money in an index fund.
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Well this week’s Wealthmaker Rulebook series is all about showing you there IS a way to potentially beat the market… whilst lowering the amount of risk you take on.
And that you can do so by using a deceptively simple set of rules some of these institutions use to grow their own money through thick and thin.
I’d know because I wrote the rulebook!
“The only free lunch in finance”
As I mentioned in yesterday’s issue, in the mid 2000s I was the Head of Macro and Portfolio strategy of one of the largest investment banks in the world. There, I was responsible for constructing the core portfolio strategy we offered to our clients.
Or put more simply: I wrote the rulebook that tells big institutions what to invest in during any given market environment.
This rulebook proliferated across the industry. It resulted in Institutional Investor magazine naming me its #1 macro investment strategist. And it’s still a popular wealth-building strategy amongst institutions today.
Now, for the past 20 years, I’ve been using a simplified version of this rulebook to keep my own money growing through thick and thin.
For the last 18 months, I’ve been using it to help my son manage his money.
And this coming Thursday at 2pm, I’ll be showing you how to construct your own portfolio using my three rules.
If you want to know how you could outperform a FTSE tracker fund by a wide margin… without increasing your risk…
Make sure you tune in.
My three investing rules
I covered my first rule in yesterday’s issue. If you haven’t read it yet, click here to get caught up.
Now, let me tell you about my second rule.
My second rule is based on the Nobel Prize-winning work of Harry Markowitz.
It’s something that he called “the only free lunch in finance”.
And the concept is simple…
If you spread your eggs across multiple baskets you can make just as much money as if you’d just put it all in a single basket…
But crucially, WITHOUT increasing your risk.
The concept I’m talking about here is of course “diversification.”
And when done right, it can end up not only lowering your risk…
But produce results like these:
Calculated using back testing. Simulated past performance is not a reliable indicator of future results. Figures do not take into account any investing costs or taxes.
Look at that.
Had you invested £10,000 in this strategy in 2009, not only would you have turned it into £177,000…
But you’d have made £150k more than you’d have made investing in a FTSE 100 tracker.
That’s a 7-to-1 outperformance… whilst taking on LESS risk than investing in a bog-standard tracker.
Of course, these results come with the benefit of hindsight. It is an indication of how the strategy would have performed in the “real world”, had you made all the calls correctly. But in the real world you need to accept that your money is always at risk and that there are no guarantees.
Now, at this point, you might be thinking: “John, I already hold a bunch of stocks in different industries. I’m already diversified.”
Well, there’s diversified… and there’s diversified.
Take the FTSE 100 index for example. That’s a good way to diversify your holdings, right?
Wrong.
That’s because the FTSE 100 index – like most other indices – is a market cap-weighted index.
This means the companies with the largest market cap make up a proportionally larger part of the index.
And that means, when you’re invested in the FTSE 100, nearly one third of your money is held in just five of the 100 companies in the index.
That fact is many investors – professional and “everyday” investors included – don’t know how to construct properly diversified portfolio.
Fortunately, I do.
I have my own proprietary formula that ensures you’re cutting risk to the bone… whilst maximising your potential upside.
And my sole goal on Thursday afternoon at 2pm is to get this formula, along with the rest of my rulebook, working for you.
Whether you have £1,000… £100,000… or £1 million to invest, I’m confident this strategy could change your financial life.
I know because I’m speaking from personal experience. This strategy helped to put my children through private school. And it’s insulated me from every big market crisis since I’ve been using it.
Including:
The 2008 financial crisis…
The sovereign debt crisis…
And the bear market we’ve had to endure over the last 18 months.
This is why I feel a responsibility to pass it onto my son.
And it’s why, as investment director at Southbank Investment Research, I feel a responsibility to pass it on to you, too.
That happens this Thursday at 2pm.
Sincerely,
John Butler
Investment Director, Fortune & Freedom
PS Tomorrow, I’m going to reveal the third and final rule of my Wealthmaker Rulebook.
It’s a way to squeeze even more juice out of your portfolio. And to do so by taking advantage of the most powerful force in all of financial markets.
I know that’s a big claim.
But I plan on following through on that claim in the next part of my Wealthmaker Rulebook series.
That’s what’s in store tomorrow morning. So keep your eye out for an email from me.
