Extreme Long Term Investment?

Lets say it was NOT my intention to make a "quick buck" but instead, invest in something that would pay off like 100 years from now.

For example, if I time traveled into the future 100 years, What would be my best option for investing?

Comments

  • A reporter once asked Albert Einstein, "What's the most powerful force in the universe?"
    Einstein replied, "Compound interest."

    More specifically, I suggest creating a portfolio of as diversified a selection of asset investments as possible that give the portfolio the broadest exposure to global economic activity. One can do this more easily that you might first think.

    Consider indexes or ETFs in equities, fixed income, foreign exchange, energy (oil), agricultural commodities, and maybe something like gold.

    A portfolio of 4 to 5 indexes can provided exposure to a very large part of global economic activity. Think of it this way: the price of everything from food (think fertilizer and transportation) to manufacturing to services includes oil. Stocks (equities) represent the investment of (hopefully) productive capital. Fixed income (think, bonds, U.S. Treasuries, ...) finance capital formation and infrastructure development. Everybody eats. Gold's influence will fade, but will likely remain for another 25 years or so. Currencies (foreign exchange) just represent the the relative performance of national economies. The influence of foreign exchange markets will, like gold, also diminish as the world moves to new types of non-sovereign based currencies such as bitcoin or other advances based on block chain technology.

    You will need to do (or have a trust do) more than just buy and hold, but not much more. Neither you nor anyone else has the ability to predict the future. If they did would not have had the financial crises. So, I would suggest equally weighting your initial investments in the above described asset classes that establishing a deliberate policy to rebalance the portfolio at some reasonable interval, minimally yearly, quarterly probably good too.

    Control costs. ETFs pretty good for this currently. New instruments for these kinds of asset exposures will arise. You would need to give a trustee specific guidelines to take advantage of new instruments, but only where they implement the general investment philosophy.

    To summarize:

    • Diversify
    • Rebalance
    • Control costs
    • Compound returns (reinvest the returns)

    Claude Shannon, the founder of information theory "invented" the idea of rebalancing. William Poundstone's book Fortune's Formula discusses Shannon at some length. Well worth the read. The book additionally introduces the idea of the "Kelly Criterion" for optimizing bets (OK position size). Interestingly, the Stanford information theorist, Thomas Cover established the mathematical link between his Universal Portfolio rebalancing algorithm and the mathematics of John Kelly's approach.

    So, yes you can get more complicated if interested but the basics will get you far.

  • @Andreas said:
    A reporter once asked Albert Einstein, "What's the most powerful force in the universe?"
    Einstein replied, "Compound interest."

    More specifically, I suggest creating a portfolio of as diversified a selection of asset investments as possible that give the portfolio the broadest exposure to global economic activity. One can do this more easily that you might first think.

    Consider indexes or ETFs in equities, fixed income, foreign exchange, energy (oil), agricultural commodities, and maybe something like gold.

    A portfolio of 4 to 5 indexes can provided exposure to a very large part of global economic activity. Think of it this way: the price of everything from food (think fertilizer and transportation) to manufacturing to services includes oil. Stocks (equities) represent the investment of (hopefully) productive capital. Fixed income (think, bonds, U.S. Treasuries, ...) finance capital formation and infrastructure development. Everybody eats. Gold's influence will fade, but will likely remain for another 25 years or so. Currencies (foreign exchange) just represent the the relative performance of national economies. The influence of foreign exchange markets will, like gold, also diminish as the world moves to new types of non-sovereign based currencies such as bitcoin or other advances based on block chain technology.

    You will need to do (or have a trust do) more than just buy and hold, but not much more. Neither you nor anyone else has the ability to predict the future. If they did would not have had the financial crises. So, I would suggest equally weighting your initial investments in the above described asset classes that establishing a deliberate policy to rebalance the portfolio at some reasonable interval, minimally yearly, quarterly probably good too.

    Control costs. ETFs pretty good for this currently. New instruments for these kinds of asset exposures will arise. You would need to give a trustee specific guidelines to take advantage of new instruments, but only where they implement the general investment philosophy.

    To summarize:

    • Diversify
    • Rebalance
    • Control costs
    • Compound returns (reinvest the returns)

    Claude Shannon, the founder of information theory "invented" the idea of rebalancing. William Poundstone's book Fortune's Formula discusses Shannon at some length. Well worth the read. The book additionally introduces the idea of the "Kelly Criterion" for optimizing bets (OK position size). Interestingly, the Stanford information theorist, Thomas Cover established the mathematical link between his Universal Portfolio rebalancing algorithm and the mathematics of John Kelly's approach.

    So, yes you can get more complicated if interested but the basics will get you far.

    Thank you for the reply!

    What other books would you recommend reading regarding this?

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