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Strategies & Market Trends : Young and Older Folk Portfolio

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From: chowder	6/18/2022 8:25:41 PM
	6 Recommendations Read Replies (3) of 21859

Warren Buffett's true genius is "cash flows". -- In the mid - 1960's, Buffett said that he figured out that while buying cheap stocks was nice, buying companies that could produce positive and growing cash flows that he could allocate to other profitable investment opportunities was a much better way to invest. It was the growing cash flows that gave Buffett the ability to do any number of things, including invest in the most promising business among his existing businesses or simply buy more cheap businesses. I can't own companies like Buffett, but I can raise the level of my cash flows and control where they get invested. A lot of the dividends I receive are not drawn as income therefore dividends aren't considered income, they are considered cash flows to be used for further investment. The mutual fund industry and Wall St. for years condition our minds to think about total return with regard to matching or slightly beating the market. I don't know about you but it doesn't make me feel successful if the market is down 40% and I'm only down 25%. That's not why I got started with investing in equities. To me it is not "all" about total return, it's all about income or cash flow. "Our approach to saving is all wrong: We need to think about monthly income, not net worth." -- Robert C. Merton, who won a Nobel Prize. A number of years ago BlackRock started saying that investors are better served by establishing and setting goals that are centered around income, as opposed to chasing total return. BlackRock now has what are known as "solution-based funds" meaning funds that are managed-payout and define themselves in terms of income goals rather than asset based investing. With cash flows in mind, here are the various cash flow growth rates for the 3 public portfolios I manage. Old Folk Portfolio - 5 year CAGR .. 22.95% Middle Age Portfolio - 5 year CAGR .. 16.48% Young Folk Portfolio - 12 year CAGR .. 21.39%

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