A Freedom Killer Is Among You
For those looking to change their paths and achieve personal or financial freedom, the greatest enemy to these aspirations is normalcy.
“Normal is the greatest enemy with regard to creating the new.” -Alan Kay.
The problem with normal is that people accept what they see, hear or read on the internet, social media, or cable news as gospel. They believe this is reality and that there’s no other way. In finance, Wall Street will have you believe that stocks and all its byproducts are the only way to build wealth and get ahead.
From time to time, something will come along that will shake up normal and attempt to be the ‘new normal.’ Social media, the financial press, and cable news will fawn over this new normal, and the investing public, in turn, will accept what is being pushed as the new normal.
In 2021, the new normal being touted was crypto with celebrities like Tom Brady and Matt Damon pushing various crypto exchanges. The public was being told that crypto was the future and that you’d be left behind if you didn’t jump on the bandwagon. Well, people who jumped on the crypto bandwagon are regretting it now.
FTX, the shining star of crypto exchanges in 2021, has come crashing to Earth. The collapse of crypto (Bitcoin was down more than 70% from its record high in November 2021) exposed FTX as a house of cards. After a run on deposits in November that left the company with an $8 billion shortfall, after investors raised alarms, FTX was forced to file for bankruptcy on November 11.
FTX suffered from crypto’s collapse and its CEO’s own hubris and fraud. FTX was supposed to be a cryptocurrency exchange designed to be accessible to the investing public where investors could trade crypto easily, conveniently, and securely.
Sam Bankman-Fried, FTX’s wunderkind 30-year-old CEO, was touted as the next Mark Zuckerberg, Steve Jobs, etc. He’s actually the next Bernie Madoff, as he’s accused of diverting customer funds in FTX to prop up a sister hedge fund. Once crypto tanked this year, the jig was up. No longer able to prop up Alameda with FTX client funds because of cratering crypto values, both Alameda and FTX tanked – losing investors billions of dollars. In December, Bankman-Fried was indicted by the Justice Department on eight counts of fraud, money laundering, and campaign finance offenses.
The problem with normal is that it rarely profits those it’s touted to benefit. Stocks and crypto benefit those peddling them, not the investors buying into the hype. Instead of granting freedom to investors, normalcy kills it.
Investors don’t have to let normalcy kill their portfolios. There’s a way around it, and according to Alan Kay:
“The way of getting around this is you have to understand normal not as reality, but just a construct. Normal is just a construct, and to the extent that you can see normal as a construct in yourself, you have freed yourself from the constraints of thinking this is the way the world is. Because it isn’t, this is the way we are.”
The way to combat normal is not to accept it. Reject what is being pushed as reality. Smart, successful investors are constantly railing against normal and creating their paths and realities. So, instead of falling for Wall Street propaganda and taking advice from celebrities, these investors follow other savvy and successful investors to the world of private alternative investments insulated from broader market hype and herd behavior.
Besides offering better risk-adjusted returns than public options, there are many other reasons smart investors gravitate towards alternative investments like investments in private companies (i.e., private equity) and real estate.
These benefits include:
- Low Volatility.
- Inflation Hedge.
- Passive Income.
- Low Volatility.
- Tax Benefits.
- Opportunity to leverage time, experience, infrastructure, and knowledge of seasoned experts through co-partnerships.
Ultra-wealthy investors have been leveraging the passive income offered by private equity and commercial real estate to accelerate wealthy building and capital preservation. By reinvesting this cash flow or creating additional income streams, smart investors have been able to grow wealth exponentially – something not possible with speculative investments like stock and crypto.
Besides all the above-listed benefits of private alternatives like private equity and commercial real estate, perhaps the most valuable benefit these “non-normal assets” and investments offer is freedom – financial and personal.
Anyone can achieve financial freedom – you must reject normal as reality and create your alternative financial reality.