I’m just back from a break in Iceland with my wife.
Iceland is visually an awe-inspiring place to visit.
The words of Buzz Aldrin on describing the landscape of the moon came to my mind — “magnificent desolation.”
Here’s one photo I took from my trip:
This was my second time in Iceland.
I had been there before…
… On business rather than pleasure.
My Disaster Pitch
I was invited to Iceland in the summer of 2006 by a famous U.S. investment guru. He was entertaining a select group of his readers there.
He asked me to come to a seminar to pitch the idea of investing in rare collectibles as part of a wealth-diversification strategy.
I duly delivered my pitch explaining the merits of investing in tangible assets with histories of long-term price appreciation.
But I missed the mark completely.
I didn’t recruit a single client from the seminar. No one seemed to care about what I had to say.
You see, the audience was already hooked on the preceding presentation by an Icelandic bank. They had just been offered a 9% per annum guaranteed fixed-income bond.
Everyone was very excited about the idea of 9% interest every year from a bank.
At dinner with the U.S. investors, I tried (rather crudely) to put my point of view across.
“Look around you: There is nothing here. With just 300,000 people, it is the most sparsely populated country in Europe. What do you think these returns are backed by?”
Hopefully, a few people listened. As you know, the Icelandic bubble burst in 2008 and investors were wiped out. People lost everything.
At its peak, the highly leveraged Icelandic banking system had foreign liabilities of $100 billion. That represented seven times the annual gross national product (GNP) of the country. Put another way, every resident of Iceland — including children and retirees — owed foreigners $300,000 each.
Although some time ago now, I still think this serves as a valid reminder of why investing in tangible assets is such an important a part of your investment strategy.
Most investment funds and financial advisers won’t do this for you. They also live in the intangible world. Traditional currencies such as the British pound and U.S. dollar are nothing but keystrokes on a computer nowadays. They are backed by absolutely nothing.
In fact, banks could only ever pay back a fraction of the funds they conceptually hold on behalf of their customers.
You may consider my views a bit extreme, but there is one inescapable truth in my argument…
Intangible assets can go down to zero in value. Tangible assets will always have some value, no matter what. Because they’re backed by something real.
The other thing is no one becomes passionate, obsessive or emotionally attached to fixed-income bonds or any other fancily named financial product. The whole reason collectibles have such high values is because people become so passionate about them.
I have always said — apart from making good returns on holding collectibles over the years — nothing else I do with my investments gives me anything like the same amount of pleasure, enjoyment and fulfilment.
The collectibles you should have bought in 2006 you have a second chance to buy from me today…
As an exercise I decided to recreate, as closely as possible, the kind of investment portfolios I recommended to those U.S. investors in Iceland back in 2006.
I thought it would be interesting to see how they would have fared if they had listened to me instead of the Icelandic bank.
I have taken great care in my selections, effectively based on what I would personally invest in at each price point.
Asset allocations and selections also reflect my future expectations of where market growth will most likely materialize over the next 10 years.
I urge you to take a look at the portfolios I have built for you:
Rare Stamps Portfolio Value: $6,500
- Total growth (2006–2019): 98%
- Average annual growth: 7.5%
Rare Stamps & Coins Portfolio Value: $13,000
- Total growth (2006–2019): 93%
- Average annual growth: 7.2%
Rare Stamps & Coins Portfolio Value: $32,500
- Total growth (2006–2019): 77%
- Average annual growth: 5.9%
Mixed Collectibles Portfolio Value: $65,000
- Total growth (2006–2019): 108%
- Average annual growth: 8.3%
Mixed Collectibles Portfolio Value: $130,000
- Total growth (2006–2019): 74%
- Average annual growth: 5.7%
Click here to see how you can set up your own similar portfolio.
The U.S. investors in 2006 chose the wrong track. If they had picked the right one, they would have enjoyed capital growth in their investments of 74–108%.
At Just Collecting, we make it our business to deliver results like this to our clients.
No matter how desolate the investing environment is outside our walls.
Founder, Just Collecting