The Last Bear

1. Mutual Funds

2. Individual, usually dividend paying, stocks

3. Bonds

4. Treasuries

5. Cash

The above is a basic example, allocation between the five main asset and liability classes varies. Unfortunately, the majority of market participants has been tricked into the above dangerous mix of assets and liabilities. What is even more unfortunate is that the majority of the general population even lacks the above Dumb Money Portfolio.

1. Wealth deterioration over time

2. The ability to talk with colleagues at cocktail parties about a portfolio

3. Sense of participation in global financial markets

4. False sense of financial security

5. False sense of smart financial behavior

1. Derivatives on indices

2. Derivatives on individual stocks

3. Forex positions

4. Commodities

5. Cash

In addition, and fully dependent on total assets, Smart Money Portfolios also hold positions in private equity as well as hedge funds and real estate. On top of that, each position is purchased on margin in order to increase leverage of the portfolio. Cash is held to support positions and a smart combination of cash and leverage as well as the knowledge on how to apply margin as well as leverage in a sophisticated manner avoids margin calls.

1. Wealth accumulation

2. Ability to access cash

3. Finances and supports desired lifestyle

4. Provides financial stability and security

5. Enables financial independence from third parties

It is simple to assemble and manage a Smart Money Portfolio, but it is not easy. The Dumb Money Camp has made it their life long mission to ensure a global marketing campaign in order to label the Smart Money Portfolio as a high risk portfolio, which is ludicrous. 

Risk equals the lack of knowledge. Nothing more, nothing less.

No, that is another Dumb Money myth. There is no correlation between returns and risk. The Dumb Money Camp does not understand how to generate returns which is why they are required to engage in strategies similar to the Smart Money Camp. The association with risk in regards to returns is derived from the simple fact that the Dumb Money Camp does not understand the strategies employed by the Smart Money Camp and therefore created the myth that high returns are associated with high risk.

Get rid of your mutual funds, the primary source of wealth deterioration as their are managed by unprofessional professionals, and substitute them with a few index ETF's. Ditch bonds and treasuries and replace them by a few Forex ETF's. Cash equals trash in a non-leveraged portfolio. Minimize your trash to a range between 5% and 10%. 

It is far away from a Smart Money Portfolio, but beats a traditional Dumb Money Portfolio any day of the week.