Monday, May 18, 2009

Is Obama Reading My Blog?


But here are two articles that are consistent with the investing philosophy of the fixed-income investor. A.K.A. the bondage freak.

It is also totally contrary to what all DIY investors believe, but just look at the articles first.


So, there are two reasons I use the title space to ask if Obama is paying attention to my investing philosophy (which is by no means unique, and as this article shows is actually quite old)


  1. Obama keeps approximately 90% of his family's savings in cash and bonds. The articles say that he keeps about 90% of everything in US Treasury notes and a chequing account. It does not disclose the maturities, or the specific nature of his treasury notes (we should assume Obama is getting a pretty good price and yield from his broker).
  2. Obama had several mutual funds, but chose to put all the equity investments (about 10%) in a mutual fund, which is an index fund. It invests large amounts of the investors' capital in shares of companies that fit on a list of social issues that are an important part of the life and values of the Obama family.


I look at those two points which are featured in the article and it reinforces the attitude towards investments that I have been advocating on this blog and in my life.


The fundamental approach and attitude is that you need to protect and preserve your capital.

Once you have done this, you should be free and confident (and, in essence, obligated) in pursuing the accumulation of wealth through a successful career you enjoy (not through growth of an equity portfolio), as well equity investments can be made to reflect your interests and personality without overly risking capital.

If I can speculate about the investment strategy of Obama:

  1. Best Case Scenario:

He is taking this conservative asset allocation strategy and using it as a way to provide the financial security to allow him to focus on his career. He can likely earn money above the inflation rate, and he can pay his taxes and this would provide enough money to support the quality of life he had enjoyed before he became "Chocolate Jesus". He's in the perfect position, after he serves the public, to accumulate and mobilize vast amounts of 'money capital' because of the tremendous amount of 'social and political capital' he will have created if his investments in his career strategy (aka. Domestic and foreign policy of USA) are successful.


  1. Obama is prudent and imagines what would be his Worst Case Scenario?

His government is corrupted and ineffective. American influence, prestige and power are reduced along with the value of the US Dollar and the stock market. Obama is ushered out of office in a single term after Sarah Palin and the re-animated head of John McCain sweep the 2012 elections. In this worst of all futures, Obama is left with no fame (except failure, disappointment and disgrace), no connections and no or little ability to build and/or mobilize vast amounts of money.


If Obama starts his presidential life with about 1.2 million in investments and about 1 million in his home, and then follows most DIY investors, he could be looking at a 39% loss in his investment portfolio.

This could mean that his 1.2 million in investments could shrink to 750 000, with no job, no ability to earn big money, and two daughters who have high expectations about their future education. Obama would not be left with enough retirement savings....

However, follow Obama as he follows the age-old strategy, where you stay conservative with your cash and savings, and are aggressive and bold in your career- and your small equity investments, investing in whatever you are respectively passionate about. Even if currency depreciation afflicts the holders of American investment vehicles like treasuries, the highly liquid nature will allow Obama to move his entirely protected nest egg into higher-income earning vehicles. He won't have to worry about taxes, because Palin will eliminate all taxes as a way to eliminate all abortionists, gays and minorities.

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