The financial markets work in ridiculous ways. It’s impossible to predict what is going to happen in the markets, and I think that age-old wisdom to “buy and hold” is completely ineffective in today’s economy. I wholeheartedly think that investing in the traditional equities market is a sucker’s game, and I’ve put my money where my mouth is. I started investing when I was a kid (really) and stopped a few years ago after realizing that investing in stocks was no different from gambling.
There are people – who are far smarter than me, with more money and more powerful computers and better mathematical models – that are spending inordinate amounts of time trying to game the market and make a quick (and sizeable) buck. How to compete with that? Do I even want to?
100% of my assets are in cash-like assets (CDs, short-term bonds).
If you see what is happening to the stock market over the past week you’ll see a seeming return to bull-market glory over the past year peter-out and head south in a hurry. I think we have yet to see the real market correction, despite the massive drop we saw a while back (requiring a massive trillion-dollar bailout).
I do believe that there are other investments that make sense. For example, investing as an angel investor or in some other capacity where you actually have a say in the company direction. There are also cash or cash-like investments like CD’s, treasury bonds or annuities that can make sense (corporate bonds do not count, they can crash just like stocks!).
A no-brainer way to earn a solid return on your money – that most people totally overlook – is to cut spending. Cut your expenses by 10% and you guarantee yourself a solid bump up in your savings. It’s totally within your control. Do it.
However, the most powerful long-term investment is to invest in yourself. Put your money into your own education and personal development – through training seminars or other skills development programs. Attend a TED Conference, a Tony Robbins seminar or a night class at a local university. Buy books by the truckload (or Kindle them) and actually read them! Explore the world and learn about historical monuments and locales by actually visiting them. Your most powerful investment is to invest in yourself.