💰The Boring Genius Strategies of the Top 1%

The best way to learn and get better at something is by following in the footsteps of those who’ve walked the walk.

Yet most copy not apply.

No matter how meticulously a novice golfer follows Tiger’s path from birth to PGA champion, they still wouldn’t be where Tiger’s at.

Not even close.

It’s impossible.

Even if the stars themselves go back in time and follow their own path, they would be on a totally different trajectory if they started over because life gets in the way.

Life is 10% what happens to you and 90% how you react to it.

But there’s an easier proven method that has worked.

I first heard of the reverse engineering method on a podcast a few years ago.

As the name suggests, reverse engineering is a straightforward approach connoisseurs in various industries embark upon. From engineers in Silicon valley to Picasso, it’s a way to identify how the greats have become great. It’s not copying, in fact, it’s the complete opposite as the most strategic, helpful, cost-effective and time saving way to get closer to your goals.

No one should strive to be in the top 1% for no reason. Wealth accumulates over time and a one hit wonder is extremely rare, especially in the markets where active traders historically underperform passive investors so tracking the patterns, behaviors and risks presents more luck as opposed to taking the exact same steps.

And sometimes it’s just time that will set you apart. After all, time in the market is more important than timing the market.

Around Here

I’ve adopted reverse engineering to make better decisions, find patterns in behaviors people I admire have and calculate the risks they’ve attempted. All in all, after studying and intervening within my successful network from family members to neighbors, what I’ve learned that really makes the difference is pure luck.

No one in this world has a crystal ball nor can control or time life. Luck comes naturally and life is full of failures with successes intertwined. We dwell on our losses more than our wins which convinces us something is always wrong and we have bad luck. Yet in reality, everyone has problems and is going through something. What you are going through, I guarantee you someone else is as well. You aren’t an outlier.

Luckily, no pun intended, there’s a way to manifest luck. Consume less and produce more. The more change and action you make, the more luck can be presented.

If you stay comfortable, how do you expect things to get better and become different?

No doubt patience and weighing your risk tolerance is key to not go overboard, but there isn’t a single person on the Fortune 500 list who hasn’t taken action.

After all, especially when you’re young, you have nothing to loose. The worst thing that could happen is that ‘they’ say no or you learn, which in my book is always part of the plan.

There’s no secret sauce to success and none of my connections ever believe they’ve reached the end point. We always strive for more running on a treadmill because they genuinely enjoy it. If they didn’t they would’ve quit long ago.

Understanding what you can and cannot control is huge. No matter where you came from, your first job, salary, boss, school, etc. you can push all of that out the window because the more you believe these factors are predictors of success, the harder it will be to find what you enjoy.

You get out what you put in. The hardest part is always starting.

Now that we’ve covered the high level non0cognitive skills, soft traits, personality and most importantly, mindset that needs to be developed to put yourself in a lucky opportunity, let’s get to know my networks a bit better and see what they are up to with their money. FYI, it’s more boring than you think.

Here’s what my connections said about where they are investing their money as of June of 2021:

Family Friend #1 (Net Worth ~$70M, 54): “I’ve been focusing on investing in emerging markets. The U.S. seems overheated and I can’t wrap my head around most valuations. ADS have been on my mind as they’ve yielded steady returns and act as an inflation hedge. I finally paid off all mortgages on the 5 commercial properties which relieves the massive debt burden on my shoulders. At this stage, I’m serious about enjoying life again. Looking forward to taking the kids to a national park close to Fourth of July when business becomes more stable again.”

Colleague #2 (Net Worth ~$40M, 37): “Finally was able to snag a great deal on a property by the beach in Greenwich. My wife and I can enjoy ourselves a bit more now after being stuck on Park Ave for the past 15 months. Not as bad as expected. Currently looking into illiquid assets uncorrelated to the market which should generate decent cash flow. Like always, nothing crazy.”

Former Neighbor #3 (Family Net Worth ~$700–1b+, my friend’s inheritance ~ $300m, 22): “Yale’s endowment strategy includes uncorrelated physical assets and alternatives, strategic hedge with added diversification. This is appealing considering it had returned an average 9% per year between June 2006 -2016 so fingers crossed it will continue this run. Private equity and VC have been on my mind for quite some time now as well. I’m always looking to add as much diversification as possible with extra cash on the side nearing 15%.”

Family Friend #4 (Net Worth ~$90M, 72):
“Considering I spent more than expected on renovations for all six properties, I’m sitting low on more cash than usual. I’ll need to reallocate eventually — most likely into fixed-income in the next few months to adjust for the Fed’s possible tapering, inflationary fears and market’s response. Sticking with real estate for the long term. I don’t see any possible housing bubble in sight. I need to make tax-conscious investment choices with almost half of my net worth invested in tangible assets at this point.”

As you can see, there’s nothing special about what my network is up to. These people come from all walks of life. Some inherited their fortune from their grandfather, #3 and others only started building their wealth at age 60.

The big question is, if I were to erase the ages and fortune size, would you still pay attention to this advice?

I’m assuming most likely not.

We follow people we aspire to be ourselves and there’s nothing wrong with that but as you can see, they not only live boring lives, they invest conservatively, passively and focus on what matters.

Here are the takeaways on what the top 1% truly focus upon that have propelled their finances:

-Preservation of capital – liquidity is key
-Tangible and intangible balance
-Diversification is key
-8+~ passive income sources to stay afloat
-Family first, business second
-Have at least 10%+ in cash at all times
-Save at least 60%+ (learn why here)
-Spend on what’s important
-Give back
-Are boring and patient
-let the market work for them not against them through a passive style
-Focus on altenrarives to add liquidity, balanced return ex. Art, crypto, farmland and collectibles

I chose to contact these folks because they are down to earth people who live simple lives and have the same problems we have. If you passed by them all walking as a group on the street, you wouldn’t be able to identify they are collectively worth shy of a billion dollars.

Your best bet to achieving what you didn’t think you were capable of is high if you take the time to understand the patterns of the wealthy, get to know people outside of your HS buddies, enhance your network in the corporate world, attend events (no excuses in this virtual world), invest in yourself and others, build your brand online to be recognized and produce more consume less.

I’m no princess or the daughter of Dimon, I’m just a student who was fortunate to be able to grow up in the most innovative city in the world with the help and luck of my immigrant parents. These contacts weren’t given to me on a silver platter. I chased after them and decided to take the first step in meeting and keeping them.

These folks and their strategies aren’t as scary as you think.