posted on Sep, 11 2007 @ 12:53 PM
Somehow I cant figure out how to quote. This for Netscape.
Netscape,you ask good questions. I invest money for people for a living. What I have found that unless you have a decided advantage, you are best off
just buying the market as a whole. So unless you have inside information or enough money to move an individual stock, just build a core portfolio,
rebalance it annually, and just keep adding to it whenever you can. Once in a while if a real promising technology comes along or a company you are
well acquainted with gets real cheap, then you should consider an individual position.
As far as stocks, bonds, gold, cash, or real estate, I always choose stocks. Even in this period of uncertianity.
The way i look at it ,the biggest risk we have is the dollar contunuing to weaken. This saps your purchasing power. Even though your currency units
stay fairly constant, you can buy less and less with them. Bonds tend to provide a bit more income, but you are generally locked into that income for
a number of years, so again each year you can buy less and less with that income and when the bond comes due the principal buys you less as well.
Gold and silver is a different creature. It tends to rise with inflation, though not always. As fewer and fewer currencies have gold backing, that
effect keeps getting more muted and muted. Still it is not a bad hedge. In a worse case scenario though, only physical gold and silver will be worth
anything. Counting on others to deliver precious metals to you in end times, probably isn't a good bet. I still wouldn't put more than 10% in
Real estate is good if you want to live in it or if you can rent it out and cover all your expenses. If you are looking for a home to live in, then
you should probably wait a bit longer. Depending on where you live prices could still fall another 10-20%. In th meantime keep your eyes open for
foreclosures that could give you that opportunity now. Historically Real Estate only appreciates at about 4% a year. We have alot of flat years to go
before we get back to that range.
Stocks, I think are the only way to go. Over the long term they will go up with inflation (companies charge more). Split your portfolio up in mutual
funds(IRA's, 401'kS) and Etf's (Taxable accounts). I split mine up between international stocks, small cap stocks, and large cap stocks. Within
that split you also want to be balanced evenly between growth and value oriented stocks. This type of allocation has a long term average annual
return(50+ years) of about 11%(higher with continued contributions). Portfolio will drop 20% or so every 5 to 6 years on average. Don't sell but use
those drops to invest heavily along with your regular investments. This methodology has always made those who stick with it wealthy. The more you feed
it, the wealthier you will be. As much as I hate it, you stillnneed to have two years of cash equivelants upon retirement. Just in case.
Don't invest money that you are saving for goals less than 3 years out just because you never know when that 20% is going to hit.
If you like tech, buy the QQQQ's. It consists of what is regarded as the top 100 tech companies. I do have some favorite tech companies, but i hate
to mention them on a public board. Could make someone do what is not right for them. Though i do like voice recognition industry quite a
bit,especially the leader.