Gary’s Q&A

Listener question & Gary’s response · Transcript passage

Fernando Díaz on the Facebook group asks, With so much knowledge on so many topics, what do you do with your money? Do you save it in a checking account, Treasury bonds, mutual funds, ETFs, gold… Do you have any simple recipes for what to do with the extra money? Is this a topic for a future episode?

I’m not going to get into the business of giving financial advice, as that is not my job, and I’m not going to get into the details of any specific investments.

That being said, I spend quite a bit of time following economic news at a macro level, and I have a few general rules that I follow.

The biggest thing is to determine large-scale, macroeconomic, technical, or demographic trends. Back in the 90s, I had a front row seat to the early Internet, and everyone at the time knew it was going to be a big deal. The trick was finding the right companies to invest in. There were many absurd companies that received funding, and some that even went public.

The general sentiment about the internet was correct, however, and it outperformed even some of the most optimistic estimates. The companies that did well did extremely well.

There are other trends today that are locked in, in particular, the demographic decline in most countries. This is something that can’t be avoided at this point.

Likewise, there is a vast amount of debt in the world today, and that is going to be impacted by the demographic decline I mentioned.

AI is probably going to be a major technology trend, but I’m not sure who will be the winners or how it is going to impact society.

The point of identifying these big-picture, long-term trends is that it helps narrow down what to invest in and what to avoid. I’m not a big believer in constantly trading. Successful investors like Peter Lynch and Warren Buffett have done extremely well with a buy-and-hold strategy.

If you don’t want to put in that much work to try to identify these trends, you can always just stick your money into an index fund, which is sort of the baseline for investing.