Eric Smolinski made his fortune in the stock market.
he started stock trading It all started in 2007, when he was a teenager, when his teacher encouraged him to invest the money he earned from odd jobs.
In my 16 year trading career, I have only had two negative years. The first are his two years, 2007 and his 2008.
“My lowest return since then is 13.78% in 2018,” the 32-year-old California-based Marine veteran told Business Insider.
From 2018 to 2022, Smolinski averaged a 24.6% return, which Insider confirmed by looking at a screenshot of his summary statement. The average gain for the S&P 500 index over the same period was nearly 12%. His best year was his 2013, when he returned 52%. The insider also confirmed that he has a seven-digit account balance as of September 2023.
The stock market is his bread and butter, but he is gradually diversifying his portfolio and adding real estate to it.
He purchased his first property, his main residence, in 2015. A year later, he sold that house and moved to his current home in Encinitas, California. His first real estate investment was a rental property in Fort Lauderdale, Florida, that he bought with a friend in 2016. His friends eventually bought him out and turned the rental property into his primary residence.
He also funded several flips, he said. He realized that “the profit margins are not always very high” on house flips, so he never attempted it himself and stuck to his role as a moneylender.
About two years ago, Mr. Smolinski entered the commercial real estate investment field. He currently holds majority stakes in three properties: student housing outside Arizona, a ski resort outside Las Vegas, and two golf courses in Arizona, insiders confirmed by examining promissory notes and subscription agreements. did.
Having tried several different types of real estate investments over the past eight years, he has found that while commercial real estate is expensive to get into, it can yield “insanely, insanely lucrative” returns. .
Mr. Smolinski prefers commercial real estate deals that involve operations such as ski resorts and golf courses, rather than owning commercial buildings and renting them out to tenants. Because profits will triple. The second source of income is cash flow. So whatever the percentage of the deal is, you’re going to be evaluating a certain amount of cash flow based on that. You can also get an evaluation of the property or business itself. ”
Put money into real estate gradually: “If it makes money, it makes sense.”
As for asset allocation, Smolinksi estimates it’s close to a 50-50 split, with half of his portfolio currently in the stock market and the other half in real estate.
He recognizes that just because he has over 10 years of trading experience and a strong track record doesn’t mean it’s the only way to invest.
The market is changing and “getting more and more efficient,” he said. “I don’t think we’ll ever get to the point where markets are purely efficient, but they will become efficient enough that lunch money will start to go down.”
That didn’t happen this year. As of late November, Smolinsky predicted that 2023 would be the best year ever for stock market profits.
“That’s because we got very good market action,” he said. “But I’m not short-sighted enough to think that just because things are so good right now, we’re going to stay the way we are.”
His real estate holdings diversify his portfolio. He will no longer be dependent on his one source of revenue and his overall risk will be reduced.
“The stock market may be closed due to a global war, but I’m not illiquid. I have money for other things,” he explained. “We could have a terrible college year with terrible enrollment in residence halls, but people are still playing golf and skiing, so we’ll be OK.”
In addition to further diversifying the portfolio, Smolinksi’s real estate holdings are generating good returns, he added. And at the end of the day, his investment philosophy is that if you make money, it’s worth it.
I’m currently happy with my 50/50 split, but I’m not afraid to make changes in the future.
“I’m going to maintain this position until things start to change. If all of a sudden commercial real estate starts to do poorly in three years, then, okay, I’ll reallocate. If the stock market starts to slow down… If I can’t do that anymore, I’ll reallocate, ‘Okay, it’s time to start moving more and more into commercial real estate to create what I want to create,”’ he said. “For me it’s a sliding scale. I’m a trader at heart, but I’m more focused on the broader business than through which vector I make money.”