The trouble with investing

I’m with this guy: you should short on the fundamentals, but the market moves on minute-to-minute ticks and not what’s coming down the highway in the wrong lane, 500 miles out. So, for those of us who can’t day trade, what’s the answer? Gold?

12 Comments

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12 responses to “The trouble with investing

  1. Anonymous

    Don’t forget that old saying: “Bull markets climb a wall of worry.” Gold has historically not been a great investment vehicle.

    I vote for boring, ie, accumulating impeccably blue chip stocks with good earnings history, good prospects for that to continue, paying a decent dividend and holding them forever. It’s a great way to avoid taxes on your gains, and your heirs will appreciate the step-up (if it still exists) for tax purposes when you pass your portfolio along.

  2. Anonymous

    Joel Greenblatt wrote some useful books on value investing for the layman investor

    Emotions, lack of common sense and poor risk judgment are enemies of any investor

    Unlike many institutions, a smart private investor can sit in cash if feel stuff is too expensive or risky

  3. out looking in

    Anon is correct- the only area of the US market currently offering reasonable valuations are large cap global “platform” companies (think JNJ, Coca-Cola). For buy and hold types, there are still reasonable valuations, although they will get dinged UNTIL the market breaks and WHEN the market breaks. But the key word is dinged..

    If you don’t care for my endorsement, follow the link below to recent comments by Jeremy Grantham

    http://link.brightcove.com/services/player/bcpid71778049001?bclid=69928231001&bctid=79128759001

    If cut and pasting link does not work, go to http://www.ritholtz.com and you will find it there

  4. Mike E

    Gold is a good bet if you believe there will be high inflation (but terrible if we have a bad double-dip recession/depression). If you don’t know if we’re facing inflation or deflation but you know something’s gotta give, futures on volatility are a decent vehicle: http://delayedquotes.cboe.com/new/stocks/advanced_chart.html?symbol=&ID_NOTATION=8941863&ID_OSI=9824314&ASSET_CLASS=IND

  5. Anonymous

    I agree with Jeremy Grantham as I wrote above: invest in high quality stocks that others may find boring, watch your dividend stream grow over the years, vastly increasing the yield on your original investment and enjoy the huge income tax break on dividends begun under “W,” ie, taxing them at the same rate as capital gains.

    Obama has said that he’ll continue to tax capital gains and dividends at the same, albeit slightly higher, rate. That is great news for dividend recipients. The tax changes that Hilary campaigned on included taxing dividends the same as ordinary income, just as they were as long as I can remember before “W.”

    This past ten years has been a “golden age” for dividend recipients, and it looks like it’s poised to continue for a while longer, at least.

    Don’t miss out!

  6. Anonymous

    anon at 8:03

    We took your advice and put everything into high quality bank stocks – you know – Citi, Wells-Fargo, Wachovia, etc. Dividends were great – until they weren’t. I don’t mean weren’t great – I mean weren’t dividends – at all – nada – retirement in the toilet.

    Would you like to see a copy of the investment outlook for 2008 to see how our advisors predicted things would turn out?

  7. Greenwich Gal

    Private Equity. Public Markets too dangerous and ripe with instability and you’ll never be on the right side of the information flow.

  8. Anonymous

    Anon at 8:11

    “High quality bank stocks?” An oxymoron. And not just with 20/20 hindsight but because these outfits were never the “impeccably blue” chip stocks I was referring to nor of the type mentioned by Jeremy Grantham in the video.

    “Dividends were great” you say. That is a danger sign. When a dividend seems too generous, beware! There is probably trouble there, as you found out.

    Dividends from strong companies like XOM and JNJ that may seem stingy at first but increase every year are the ones to go for.

    My post above deliberately suggested only a “decent” dividend, and by that I mean at or below the S&P average yield. If you try to reach far above that, you’re going to sacrifice something.

    “Would you like to see a copy of the investment outlook for 2008 to see how our advisors predicted things would turn out?”

    No, thanks, but I am very, very sorry to hear how things turned out for you. I hope that you are receiving better investment advice now.

  9. foobar

    just my opinion of course, and caveat emptor:

    Gold is in a 20 year bull market only half complete. Expect final highs in 2020 in the $5,000 – $10,000 range. It will trade to as low as a 1 to 1 ratio to the Dow Jones (ie, implies that by 2020 the Dow may go pretty much nowhere from here).