Transcription
Hey everyone. So on this video, I'm going to help you understand that we are going through a financial reset. It is going to have a massive impact on your wealth. And third, I'm going to help you understand as to how I am repositioning my portfolio. What are the key points that I will keep in mind? And these are the same points that I'm applying. I'm advising my students to apply. So I'm going to give you a flavor on these topics.
So just to begin, the first key thing that you need to understand is that we are going through a financial reset and there are three parts to it. The first key part is the current attitude of the US. Now, US is the apex country in the world. It's going and flexing its muscles with everyone, right? Venezuela, Cuba, it might capture. So, long story short, a lot of countries are now troubled with the US. There is a loss of trust with the US. But what is definitely going to happen is that whatever countries can do to hedge themselves against the US, they will do it. So this is the first financial reset that is happening in the world. We are this is already happening. Okay.
So, for example, Russia has created a kind of a localized economy. They are not depending too much on the US. So this is the first layer. The second layer is that US and China are going to divide the world into two in a way, right? And they are going to do whatever they can in order to extract maximum benefits out of it. So for this, you need to apply second-order of thinking. Okay? Just think that if US and China partners together, what are the what is going to happen, right? Number one, the AI trade is going to do well, right? That okay, AI dominance, US, China, number one, two, they can always compete for the first two spots. Number two, they are going to manufacture more, right? They are going to insource a lot of manufacturing because at the end of the day, AI will allow you to replace human labor, right? Especially in low-end or mid-end jobs like factory automation, whatnot.
So, what does this mean for the world? So there are multiple implications, but one of the key things that I personally see is the fact that China will go out and do a lot of dumping. Okay. So dumping means that they are going to manufacture a lot of stuff, maybe even low-quality stuff, whatever they already excel at, they will use AI to continue to maintain their dominance on manufacturing supply chain, etc. And they are going to do a lot of dumping. So India becomes one of the key markets where this dumping will be done. Right? Now, please don't get mad, right, when I tell you these things. Think rationally. It's at the end of the day, you are putting your money on the line. So be rational about it, investigate. Okay, this is the second layer. Third is that overall, the pie of the world will increase, that the size of GDPs will increase because we are more levered. But what is going to happen is that America and China are going to extract more value. Right? I just talked about an example. But these are the three critical layers of a financial reset that is happening. Okay?
Now, okay, now natural question comes that, okay, this looks plausible, maybe your thesis is right, maybe your thesis is wrong, how should we kind of apply or invest in such a world, right? Should we go and buy more gold? Should we invest in more Indian equities? Should we go and buy American equities? Should we go buy Chinese equity? There's so much happening, okay? So here you need to think calmly, right? I have also been doing a lot of study, I have also been reworking my portfolio, I have also been running my communities, right? I get a lot of feedback back from them. So see, what I would suggest is this. Okay.
So I will suggest 10 points and I will recommend that you go through each of these 10 points. Right? Here are the points that I will speak about. So these 10 points are going to be very important. Please listen to this video carefully. Okay. From this point. Okay. So number one is that you need to understand something called as barbell strategy of investing. And a barbell looks like this. Okay. So for example, on the left-hand side of the spectrum, you have low-risk trades. Okay. Low-risk strategies. Okay. So these are basically something like gold. Okay. Something like bonds, right? Now, these are low risk, right? I mean, here you're okay, right? If there is a 20% correction on gold, you can always buy it. You will not be too scared, right? You you're okay going through volatility. So these are low risk and one could argue low reward because typically or traditionally gold hasn't given like hyperbolic returns. Okay, barring like last a few years. Okay.
On the right side of the trade, you typically pick growth assets, right? And let me help you understand this point more. For example, when we are buying consumption companies, okay, for example, if you're buying consumption play in India, okay, so for example, we will buy like something, whatever, like Vishal Mega Mart or whatever it is. The point is that see, at the end of the day, this is a consumption trade. Okay. A lot of people are buying like whatever t-shirts that are being manufactured by like Vishal Mega or being sold by Vishal Mega Mart, right? They might have a low profit margin. Now, if a lot of dumping is done in India when it comes to clothes, t-shirts, this stuff, what do you think is going to happen? Well, the profit margins are going to shrink. Okay? So, this is a consumption play, right? This is a consumption play on low-end goods. Now, this is not a growth play, right? You might get very impressed that, you know, okay, Vishal Mega Mart or some this company is selling a lot of stuff. They are revenues are growing. Great, revenues are growing. But do you think that their operating profit margin is going to go up subsequently? According to me, the answer is a no. Right? Because you're basically like competing against the fact that, hey, China will do dumping. Okay, somehow, right, they will do that, right? If you believe in that macro thesis, then this might not be a great, you know, kind of investments, right? So I'm just giving you an example, right? Don't take it as a stock investing advice. You do whatever you like, right? I'm just helping you understand the thesis, okay?
Now, what is a growth play, right? Something like AI, right? Why, if you strip apart the US's GDP, the biggest contributor to US's GDP is what? AI, right? If you take AI out, rest of the other sectors are growing negative, in a way, right? But the AI trade is growing like crazy. So that is the major contributor of GDP. Now, apply the same logic that, hey, you know what, do you think that Nvidia's profit margins are going to go down dramatically? No, right? It's it's unlikely. Plus, they have options of growing into other segment sectors, right? Now, Nvidia is one of the most profitable companies in the world. So just by the virtue of it growing, of course, they are going to lose some profit margins, but given the nature of the industry that it's contributing to the GDP and it's growing the pie, uh, this this is very, this becomes very important. Okay. So I hope I'm able to help you understand what is the meaning of growth. So in a barbell strategy, what you simply do is that you have a chunk of assets on the growth side, a chunk of assets on the low-risk side. Okay. So this is what I would tell you that you need to own this asset, this asset in the middle, don't own the assets. For example, what are in the middle type of assets? So for example, take a look at PF, EPF, PPF that you'll stick your money for 10, 15, 20 years and how much returns are you making? 8%, 8 and a half% in INR terms. So, in dollar terms, how did you make? How much did you make? 4%. Now, if you're making 4% return on a 15-year basis, it's just a poor trade, right? I mean, it it just does not make sense. It's in the center of this barbell. It does not add up. Okay? So, that's my take. You want to do PF, put 100% of your money in PF, do it. Okay? But I'm just telling you logic, sense that build a barbell, right? That's very, very important for you.
In case you want to learn how to do all this, I do teach portfolio construction, portfolio building. I take my community through every single investment that I'm making. I teach them why am I making these investments. I do live classes, explain macro thesis. If you want to be a part of that community, check out the links in description comment box. Everything that I teach is driven by logic, data and with a lot of honest intent because I myself I'm putting my own money on the line. Okay. So, okay. So, you can check out the details.
Now, let me move to point number two. Okay. So, okay. Expanding this barbell, what you need to do is that you need to so let's talk about the low-risk side first. So for example, let's say that you want to buy gold. Now, what is it that you need to do? So now take a look at this chart. Okay. So this is the gold chart. Okay. Now, what is happening here? Well, it is trading at its 150-day moving average line. Okay. Now, this is this black line is called as 50-day moving average. This is 150 day. This is 200. So sorry, this is not 150. This is 200-day moving average line. Now, what is the meaning of 200-day moving average line? 200-day moving average line means that if you consider the price of gold over the last 200 days divided by 200 days, then that gives you the average price. Okay. Now, it is trading on a support. The support is 200-day moving average line and I'm adding gold here. Okay. Now, gold will be like maybe 5 to 7% of my overall portfolio. So if my portfolio is 100 units, gold will be five to seven. Even this I will buy it in three tranches. Now, I was not. Now, many idiots, right, they comment on my video that, oh, you have changing your tune about gold, why are you dumb, right? I mean, after four, five months back, I was not in favor of buying gold. Why? Because gold was trading here. In the last four or five months, gold has corrected by minus 20% now. Okay, it is trading at support, so I'm doing my first buy or first major buy here. Okay, so it makes sense. Now, can it fall more? Yes, if it falls more, I'll buy more. So like people who keep on commenting like BS, right, are just dumb, right? I If an asset changes its price by 20%, as an investor, you should look at it carefully if it fits your portfolio. So this is a low-risk side of buying gold. So this is something that I would do.
Now, see guys, basically like I am in favor of buying physical gold over digital gold. Why? Because especially in a country like India, the digital gold versions, the taxation on it can be changed retrospectively. Retrospectively, for example, we had sovereign gold bonds. Now the tax treatment of it in the secondary market was retrospectively changed. Please read more about it. The tax treatment of SGB. So going forward, there is no trust that, okay, you are buying digital gold, there is an exact track record of it buying. If you try to liquidate it, the rules might be changed, I don't know. Okay. So this gives you very less control, right, in terms of your gold aggregation strategy. So the idea is that you buy physical gold, right? Why? Because you have more control over it. This is very similar to buying Bitcoin. If you are doing self-custody of Bitcoin, it makes sense. But if you are keeping it on an exchange, it's a different argument altogether. Okay. There is no problem with like gold as an asset or Bitcoin as an asset. But the self-custody part of it is very important. Now, people who want to buy digital gold, please buy it. What can I do? Right? But I'm just telling you honestly that the entire point of buying gold is a safety trade. And if you have no custody of gold with you, there is no point in buying it. Okay? So that's the bottom line. So even if you're buying digital gold, convert it into physical gold at some point, right? For example, right, I mean, if you have decent quantity, then you go like buy that same amount in physical book, okay? So that's a simple point, right? How it goes, right? So this is honest.
Then comes next point, right? Next point, I will take you to the right side of this barbell, right, which is growth assets. I explained you briefly what is the meaning of growth assets, but, you know, we confuse our growth assets. For example, we might think that, hey, you know what, India's GDP is growing at whatever 7, 8%. It's a growth economy. We might think that, hey, you know what, US's GDP is trading at only like whatever 3, 4%. It's not a growth economy. We might think that AI is growing really fast. It's growth. Then we might think that, okay, you know, Zomato is growing really fast. It's growth. So you need to get the the viewpoint of growth. What exactly is growth but at correct valuation. Okay.
Now, for context, Meta stock right now, right? It's trading roughly 30%, 25, 30% from its peak. The company grows at more than 20% CAGR in earnings in dollar terms. Small cap and midcap companies in India also not grow at that rate. Okay. Now, here is a wide moat structural bet, right? And it's doing well. Right? So if you analyze Meta in context of the growth and valuation, it's a much better bet compared to midcap and small cap companies in India. Why? Because you're not comparing the growth rate of the entire US economy and using it as a proxy against the India's GDP growth rate. Because by that logic, you should have just stick to like Nifty 50 and automatically assumed, you know what, okay, Nifty 50, it's doing like really well, it will forever keep on growing. Do not confuse that, right? Basically, there is entire market, okay? Market is really big. Within that, there are pockets of growth. Within that, there are specific companies that trade at certain valuation. So your job is to pick companies which are high growth companies but trade at somewhat fair valuation because valuation might not always be easy to understand and these are not complicated to figure out, right? For example, in India, pick companies that are growing, that have high growth rate, okay? Growth rate of earnings, not growth rate or revenues, okay? So if you pick such companies where the earnings growth rate is really fast, okay, and they are trading 20, 30% from its peak, pick it up, okay? So generally, valuation-wise, it should be okay. Now, this is not a complete picture. Again, I would request that in case you are a serious investor, consider my communities. I do teach all this stuff. You can check the links in description comments. But long story short, ideally, you need to buy some kind of margin of safety. Okay? So, at least like 20, 30%. For example, just a Jio Finance. Now, if you find it 30, 40% cheap, then okay, fine, right? Because it's going to be a high profit margin business. It's a finance business, high paying capacity customers. It's not a pure consumption-based play. Okay? So, if the economy keeps doing well, then something like Jio Finance is going to do it, right? So this is how you think, right, in a very simple way about growth. Just don't mix the fact that, okay, the entire economy is growing at 7, 8, 10%, so my money will also grow at 7, 8, 10%. It doesn't work that, okay? So I hope that this point is clear.
Next point is, do not make large or big commitments. Now, this is a very, very important point and you need to truly understand this point. See, what is the meaning of not making large commitments? You need to first and foremost understand the meaning of large in context of your portfolio. For example, if your portfolio is 10 crores and if you are buying a 2 crore house, it's 20% of your net worth. Okay, so you're committing to buying a 2 crore house, whether you do it on EMIs or if you outright pay for pay in cash or whatever, that's a separate argument. But just understand large commitment in your case. So anything that has to do with more than 20% of your wealth is a large commitment. Okay? If you are if your net worth is let's say 2 crores and you're going and buying a 1 crore house, it's a large commitment. Okay? When the entire economy goes through a financial reset, ideally you should have cash to take advantage of opportunities.
Now, here you need to understand the concept of liquid versus illiquid wealth. Okay. Now, liquid wealth simply means that, hey, you are able to cut your positions and get your money back basically in two, three days. For example, if you have a 1 crore rupee mutual fund, then you there is some kind of market opportunity that comes. You can sell your mutual fund, get your money in two, three uh, two, three days and that's liquid. Okay, it's easy to sell. An illiquid investment is what? Illiquid investment is basically like real estate. Okay, you have a 1 crore house, right? And you find a buyer tomorrow, even to get that thing done. Okay, even to sell it and get that money. It might take you a week, 10 days, 15 days, register all that stuff. That is illiquid and that's assuming that you can find a buyer very quickly who is willing to buy your asset in a very quick time.
Now, see, whenever financial reset happens, okay, there are a lot of opportunities that will come. For example, take a look at this chart. When Trump announced the trade war in 2025, there was a 20% drop in the market. The entire market dropped by 20% in less than a month. Okay, similarly in 2026, again, market dropped by 20%. Now, these are golden moments when you have to take advantage. Right? Now, if a financial reset is happening, there will be 20% drop, okay, then it might recover, then there will be another 20% drop, or then it will recover. So you need money to buy these phases. If you're not buying these phases of 20, 20% drops, and honestly, you are not taking advantage of opportunities. So for that, you need to keep some money liquid, or a large part of your money liquid. Therefore, by design, for example, right, almost 60, 70% of your net worth should be in liquid assets. This is very, very important. If you are extremely real estate heavy, then you are doing yourself a disservice.
Now, again, a bunch of people will come after me. Hey, don't buy your house, you yourself buy like real estate. Why? My real estate is not on loan. Okay. 70% of my net worth is liquid. Maybe even more, 70 to 80% of my net worth is liquid. 20% is real estate. Okay. So that's how I would put it. I have not sold any real estate. I'm still bullish on South Goa real estate. I continue to buy there. All my investments in South Goa have done exceptionally well. Okay. Uh, very bullish. The real estate that I own in Dubai, it's doing well. There is no problem. It's fully tenanted. I bought apartments in prime area that were handed over. Okay. So, it's not like I did not buy like speculative properties. So, you really need to understand this mix of liquid versus illiquid because in a financial reset, it's extremely critical that you keep most of your money liquid, not illiquid. Okay. So at least 60%, even more is better, and 20, 25% you can keep illiquid.
Now, many of you will get a little bit pissed off that, you know, by that logic, we'll never be able to buy a house. See, that's a more nuanced conversation. So I'll not make it a rule for you guys, right? But just generally, try to understand the sentiment with which I'm speaking that that if you're trying to balance for a financial reset, we don't know when it's going to happen. Whenever it happens, it's critical that your money is liquid. If it is liquid, then you can do a lot with it. Okay. So this is where I will leave. Okay. This point.
Next point is that you should have investments across multiple countries or across multiple asset classes. There are two points, right? Multiple countries, multiple asset classes. See, multiple countries, you can only do if your net worth is more than 5 crores. Okay, let's be realistic. Okay. If your entire net worth is more than five, six crores, then you can buy US stocks. You can set up a business abroad, right? You can own multiple wealth accounts, right, in foreign countries, whatever, right? A lot of things can be done. The idea is that you have access to different types of geographies. Why, why does that help, right? Because we don't know like whenever a financial reset comes, right, we don't know whether US stocks are going to correct more or like, you know, Japanese stocks are going to correct more. We don't know that. Okay, let's let's not uh try to be like, you know, know-it-all, right, and try to predict that, okay, you know what, this is definitely going to happen or this is not going to happen. The idea is to create a balance. So if you are someone who is rich, more than 5, 10 cr capital, then it's very important to be geographically diversified. Some easy investments would be that, and it's very easy for Indians to do that. You can easily buy legally buy US-based assets, US stocks or US ETFs. Now, on that same US brokerage account, you can even buy European companies. Okay. So for example, LVMH and all these Louis Vuitton and all, right? I mean, these are ASML. So these are all European companies. You can buy Latin American companies like Melly, Mubank, all these are Latin American companies. So yes, you're using like US stocks, but on that exchange, you are getting exposure across different, different geographies. Okay. So at least have exposure across three to four geographies. This is very important if you're rich.
Now, if you are extremely rich, like, you know, 15, 20 crores plus, then you can do much more, right? I mean, you can buy like real estate in Thailand, for example, right? You can buy like real estate in Middle East. Now it's a good time to buy there. So a lot of things can be done. Okay. So I'll not belabor this point. Now, let's talk about the other set of people. Now, some of you might say that, you know what, our portfolio is not that big. What can we do? Easiest way is that open an account with a US brokerage company that again gives you legally like access to a bunch of different instruments, right, which you can get into, right? Again, as I spoke about Latin American stocks. You can buy like UAE ETF if you want. You can buy Southeast Asian companies which are listed on US stock exchange. Lot of things can be done. Okay. So that is an option for you. That's a legal option for you. Even if you have like five lakh, 10 lakh, 20 lakh rupee, this can be done. This gives you geographical diversification. This is critical, right? That you have this diversification. Do not put your job, your entire savings, your entire investments in one country, and yeah, that's that's going to be a problem.
Next point that if you are working with small capital, now this is a point I explained, but but again, I will belabor this point that if you're working with small capital, at least 50 to 60% of your allocation needs to be global or in gold because many of you will start now writing anti-national this, that stuff, buy, right? It's fine, just buy gold, right? Big deal, okay? Just buy gold, not a problem, okay? So do that, no problem, okay? So for example, if you're not comfortable buying US stocks and you're going to US exchange and all that jig, don't do it, okay? Though it's legal, 100% legal, no problem there. Okay. LRS is there. You can transfer up to two and a half crores a year, roughly $250,000. Right? So by the time this video is out, maybe like one US dollar is equal to 100 rupees. So I'm just doing like rough comparison there. So you can send all this money legally. Okay? So this is legal. No problem there. It's regulated both by Indian entities and the US entities. Not an issue. But if you don't want to do it, stick to gold. Okay? So that's okay. Not a problem. Okay? And I'm saying 50/50. So 50% Indian market, 50% US. If you're working with small capital, you don't want to do all that jig jig. Natural response comes that, oh, you know that TCS tax collected at source. See, TCS is refunded. Now, just because TCS is there does not mean that you start making bad investment decisions because you are making investment decisions for the next 10, 15, 20 years. Okay? Just because TCS is there does not mean that you keep 100% of your concentration in one geography. Okay. So this is a point that you need to know about.
Next point, going forward, you'll continue to see something called as derivatives on real estate. These are called as REITs products. Okay. So REITs product simply means that, for example, uh, you can't really buy a house, right, because, uh, you know, real estate has become unaffordable these days. No problem, 500 rupees, give to like this particular mutual fund, they will buy a real estate property for you, right? And whatever cash flow that these guys are making, they will pass on to you as rent. This is a scam product. Okay. I'm just being blunt with you and I have said about this numerous times. As a real estate investor, I know enough real estate investing. I have put enough real estate money across different parts of the world to tell you that REITs products will not work in a corrupt economy. Now, what is the meaning of that? See, think about it this way. What are REITs products? Now, let me give you a very quick summary there. See, this is a house, okay? And you can't really afford this house. Like some genius fund manager comes and says that, you know what, okay, 500 rupees you give, right? And we get like, you know, thousand such people, right? And we collect like this much amount of money and we buy like this house, okay? So it's money, so let's make it like 10,000. So okay, now this we buy a house, okay? Now, fine, you own like one share, right? And for example, if I'm getting a rent of whatever, like, you know, 100 units, then because you're a shareholder, I will give you a fraction of this rent. Now, okay, great. This looks great in theory, but think about it practically, right? India mein how's rent collection typically happens, you tell me, right? You might be owning some property, ask anyone, right? Ask an uncle who owns like multiple properties near you, how do they collect rent, right? So they'll say, yeah, you know what, okay, like landlord, I'm the landlord and I have to collect like one lakh rupee rent, but if I take one lakh rupee rent, then I'll have to pay so much tax. So how about this, right? I mean, you pay me like 50,000 rent in black and 50,000 rent in white. Now, what's stopping like someone from doing the same here, okay, where you have no control, okay? So the entire yield is can be mathematically designed here. Okay. So your wish, right? You want to burn your money, go ahead, right? Be my guest, right? But I'm just telling you a fact that this does not work in a corrupt market, okay? Real estate is one of the most corrupt things in India, black money, extremely overvalued, whatever you you say, whatever you like, okay, politicians, builders nexus, whatnot. Long story short, this is the issue. Your wish, if you want to put like money on these type of products, fundamentally it's a flawed product for a market like India, and right? So, so, yeah. So that's the bottom line. Do not take custody risk.
I wanted to teach more points, but I think unfortunately I'm running out of time. So I'll just quickly summarize the video now. Okay. So, okay. Number one, use barbell. Number two, buy some physical gold at different intervals, especially when it's at support. Buy it in physical format. Number three, buy the real asset, not the derivative. Number four, please keep your money liquid, almost 60, 70% of it. Reason being that you can take advantage of a drawdown or a financial reset whenever it is happening. Okay. Number five, do not make large commitments. If your net worth is 2 crores, do not go and buy like a 1 crore house. You can get stuck with it. That's very important. The next point is that you need to have investments across multiple countries, and this can easily be done through US stock market index. Right? You can easily do that, right? If you have a brokerage account there, and it's legal to open it, right? Uh, next point that you, if you're a small ticket investor, please make sure that you do a 50/50 allocation, right? Uh, that's another point. Then we talked about derivative products in REITs that do not trust these type of products. If something looks weird, don't touch it. Try to own the underlying layer. Okay, that's it. That's what I would say.
I hope that this video gave you clarity. Do not be scared about the world resetting. People who do not learn, do not pivot are the ones who are going to get wiped out. You're smart. If you keep an eye out for things, you will do fabulously well. Okay, so take this video as a learning exercise and accordingly diversify, research, and I'll see you for next time.