Follow along, don’t take risks, just keep your head down and work, and you’ll achieve your dreams – said nobody ever. In investing, what is comfortable is rarely profitable.
In investing, there are two schools of thought. One focuses on the concept that diversification is an established tenant of conservative investing. The other school of thought adheres to the notion that broad diversification is required when investment managers do not fully understand the market. We follow a more balanced investment strategy in that diversification may preserve wealth, but concentration builds wealth. By applying an analytical analysis to our investment models, we are able to diversify our holdings and concentrate on investment models that are sustainable for the long run.
Our real estate holdings consisting of real estate joint venture financing projects, in-house real estate developments, and urbanization of raw land for resale provide diversification with concentration. Our supplemental investments in index funds (S&P 500 and NASDAQ composite ETFs) provide concentration with a diversified exposure. It is the combination of these two complementary strategies that the firm consistently delivers alpha returns – even in a year like 2020.
The metric of risk-adjusted return measures the gains an investment makes relative to the amount of risk the investment represents during a given period of time. In other words: if two or more investments delivered the same return over a given period of time, the one that has the lowest risk would have a better risk-adjusted return. While many investment vehicles promise to deliver “high” returns, those returns are rarely, if ever, sustainable. By diversifying our real estate holdings and augmenting earnings with supplemental gains through index fund ETFs, we consistently provide sustainable alpha returns for the firm and its investment partners.
Primary Investments – Real Estate
The major fortunes in the United States have been made in real estate, which explains why the U.S. real estate market is oversaturated with both capital and investors. Emerging real estate markets like Mexico provide an alternative investment marketplace with virtually no competition from institutional investors, and opportunistic opportunities are plentiful. Our core real estate investment pathways are: joint venture financing; internal development projects; and urbanization of large raw land parcels for resale to small-cap developers in smaller lot configurations.
Secondary Investments – Index Funds
Exchange-traded funds (ETFs) were first developed in the 1990s as a way to provide access to passive indexed funds to investors. Historically looking back over the last thirty years, ETFs have outperformed active management year after year. Through our proprietary analytics research models, we are able to realize gains from the fluctuations in the two indexes that we invest in (S&P 500 and NASDAQ Composite). By using “Bull” oriented ETFs like VOO and QQQ when the indexes are trending upwards, we’re able to realize gains. When the market is trending downwards, gains are realized by using “Bear” oriented ETFs like SPXS and SQQQ. We look at market fluctuations, upwards or downwards, as our friend and profit from those numerous meniscal fluctuations that occur during any given trading day.
In the long history of humankind, those who have learned to collaborate and improvise most effectively have prevailed. The same can be said about investing. Finding good partners is the key to success in anything: in business; in marriage; and especially in investing. For that reason, participation in Toltec Capital is by private invitation and not available to the general public.