Timing Is Everything
Lately I’ve been thinking about investors’ perceptions of the stock, bond and commodity markets and how this affects their investing decisions. Most people focus on and invest in the equity markets because that’s what most daily financial news from CNBC, Bloomberg, etc. talks about. Every day you hear about the movement of the Dow, Nasdaq and S&P 500 indices, usually with commentary from stock analysts explaining the reason(s) behind these daily movements.
The only problem of being focused on the equity markets is that I believe stocks are in the early-to-mid stages of a secular bear market, where stocks could go sideways (+ or – break even) or experience minor to significant losses. Investors can make money in stocks and stock options, but only if they really know what they’re doing and do sufficient research.
I believe that most people aren’t true investors because they can’t accurately read a company’s financial statements, and they invest based on a hot tip or the latest ‘booyahs’ from Jim Cramer. Stocks don’t always go up or down in the short-term based on fundamentals – that’s where good technical analysis comes in. Just as in life, timing is everything… especially with regards to investing.
Winston Churchill once said, “The farther back you look in history, the farther ahead you’ll be able to see.” If you look back to the 1970s, you’ll see similar parallels to today: Rising inflation, higher oil and gas prices, a weakening US Dollar and stagnating incomes. These factors fueled the commodity bull market in the Decade of Disco.
When I hear someone say they know of a great stock or mutual fund, to me that’s like someone saying they have a great horse and buggy. It’s a slow vehicle that won’t get you to your destination as quick as a car will. Most mutual funds and stocks will be poor financial vehicles for investors to reach their goals in the next 10-15 years. I believe that physical gold and silver will be more profitable and safer choices than most financial paper assets.
Robert Kiyosaki, best-selling financial author, also concurs in two of his Yahoo Finance columns here and here.
To be a successful investor in today’s investing environment, you need to be financially and economically literate. You must be able to accurately read and interpret financial statements. If you don’t know how, I’d suggest you buy the book Rich Dad, Poor Dad, and play a board game called Cashflow 101. It’s like a real-life version of Monopoly that’s fun to play. It also teaches you how your financial statements (income statement, balance sheet and statement of cash flows) are affected when you take certain financial actions.
Once you get financially literate, you’ve got a good foundation to get economically literate, which will be the topic of my next post – stay tuned.
The only problem of being focused on the equity markets is that I believe stocks are in the early-to-mid stages of a secular bear market, where stocks could go sideways (+ or – break even) or experience minor to significant losses. Investors can make money in stocks and stock options, but only if they really know what they’re doing and do sufficient research.
I believe that most people aren’t true investors because they can’t accurately read a company’s financial statements, and they invest based on a hot tip or the latest ‘booyahs’ from Jim Cramer. Stocks don’t always go up or down in the short-term based on fundamentals – that’s where good technical analysis comes in. Just as in life, timing is everything… especially with regards to investing.
Winston Churchill once said, “The farther back you look in history, the farther ahead you’ll be able to see.” If you look back to the 1970s, you’ll see similar parallels to today: Rising inflation, higher oil and gas prices, a weakening US Dollar and stagnating incomes. These factors fueled the commodity bull market in the Decade of Disco.
When I hear someone say they know of a great stock or mutual fund, to me that’s like someone saying they have a great horse and buggy. It’s a slow vehicle that won’t get you to your destination as quick as a car will. Most mutual funds and stocks will be poor financial vehicles for investors to reach their goals in the next 10-15 years. I believe that physical gold and silver will be more profitable and safer choices than most financial paper assets.
Robert Kiyosaki, best-selling financial author, also concurs in two of his Yahoo Finance columns here and here.
To be a successful investor in today’s investing environment, you need to be financially and economically literate. You must be able to accurately read and interpret financial statements. If you don’t know how, I’d suggest you buy the book Rich Dad, Poor Dad, and play a board game called Cashflow 101. It’s like a real-life version of Monopoly that’s fun to play. It also teaches you how your financial statements (income statement, balance sheet and statement of cash flows) are affected when you take certain financial actions.
Once you get financially literate, you’ve got a good foundation to get economically literate, which will be the topic of my next post – stay tuned.
posted by Brian Ochsner | 2:00 PM
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