Tuesday, November 07, 2006

Are you worried about your investments?

If you are not worried -- your money is already in danger.

Worry is a sign of respect for risks that threaten your future. Don't try to hide from what are unavoidable risks, instead embrace and manage risk. If you are not worried, you probably are not risking enough.

There are many comforting investment rules and guidelines, most of them are reasonable sounding, many of them are traps. Investment allocation models, economic models, and general advice have little personal value. You are unique, your holdings are unique, your needs are unique.

As an example a government bond is sold as a secure, blue chip, safe investment by most advisers. They may even quote investment "rules" that suggest the bonds allocation for your portfolio should be the same as your age. Age thirty = 30% bonds -- age seventy = 70% bonds.

Government created money growth is usually far greater than their bond's yield. Government induced money growth is a hidden tax, decreasing the purchasing power of your cash and raising the prices of goods.

Excess money growth causes inflation to be greater than your bond's return. That solid, safe, respectable government issued bond loses value every year. This is not often mentioned by investment advisers.

Bonds and government notes may be an excellent speculation during periods of decreasing interest rates or in special circumstances. However as a long term secure investment all they offer is: The investment safety of a guaranteed loss.

Most investments are like that, they seem safe, but undisclosed and hidden risks are stealing your money. other costs include fees and commissions your investment manager charges for leading you to these dangerously conservative investments.

Develop an understanding of the speculation rules that determine the outcome of your investments.

Most investors lose in the long run.

Most investors follow advisers.

To succeed in investment, learn to think like a speculator. Follow a system of reasoning trying to discover opportunity from within inconclusive evidence -- act upon that reasoning - and then react quickly to fresh information.

Follow the speculation rules of successful speculators.




Theirs lots of more important things to be concerned about than your investments.

1:58 PM  

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