How to invest money (it's really not very hard)

On October 27 2015 07:50 EJK wrote:
Over time, the stock market as a whole goes up that is a known fact.

On October 27 2015 10:21 notesfromunderground wrote:


up in flames more like it

On October 27 2015 09:51 Doodsmack wrote:
100% stock baby .

On October 27 2015 10:33 KwarK wrote:

Looks like someone sold at the low point in 2008. :D

On October 27 2015 12:27 notesfromunderground wrote:


I don't believe in gambling

I'm just saying, believing things like "the stock market always goes up over the long term, it's a fact" betrays a certain lack of historical perspective and a naive faith in the 'normalness' of one's own moment.

On October 27 2015 12:27 notesfromunderground wrote:


I don't believe in gambling

I'm just saying, believing things like "the stock market always goes up over the long term, it's a fact" betrays a certain lack of historical perspective and a naive faith in the 'normalness' of one's own moment.

On October 27 2015 12:52 Jerubaal wrote:


Welcome to Modernity.

On October 27 2015 12:27 notesfromunderground wrote:


I don't believe in gambling

I'm just saying, believing things like "the stock market always goes up over the long term, it's a fact" betrays a certain lack of historical perspective and a naive faith in the 'normalness' of one's own moment.

On October 27 2015 14:33 KwarK wrote:
I own the means of production, or at least parts of a highly diversified selection of means of production. That strategy has about three thousand years of history on its side.

On October 27 2015 23:48 notesfromunderground wrote:


Three thousand years of the mass-distributed petty ownership over a diversified portfolio? I think not

You don't own means of production, by the way. You own a claim on an income stream. Two completely different things.

The hubris of moderns is really astounding.

Look, it might work, it might not. Just don't drag history into this, please. You are the novelty. You are an unprecedented, highly volatile experiment is sociopolitical organization. Forget this at your peril.

One closing thought. Before any of you throw your money at the biggest credit bubble in human history, you might want to study some things about monetary policy and the Federal Reserve's response to 2008 and what has happened in the aftermath of that event. Happy investing!

On October 28 2015 06:36 Aveng3r wrote:
good read. to dumb this down to its very bones:

There are 4 mantras to successful investing. They are
1) time in the market
2) diversify
3) allocate
4) minimize fees

your post addresses most of these, let me suggest a few things.

Allocate 50% large cap, 30% mid cap, 20% small cap.

If this is the US stock market we are talking about, allocate heavily into healthcare, no matter which sector. Its been averaging about 20% gains per year, and this isnt gonna change anytime soon because the demographic isnt getting any younger.

Concepts Conquer Again: The Biotechnology Bubble
What electronics was to the 1960s, biotechnology became to the 1980s. This technology promised to
produce a group of products whose uses ranged from the treatment of cancer to the growing of food that
would be hardier and more nutritious because it had been genetically modified. In its cover story
"Biotech Comes of Age" in January 1984, BusinessWeek put its imprimatur on the boom. "The
fundamental question 'Is the technology real?' has been settled," the magazine reported. The biotech
revolution was likened to that of the computer. The magazine reported that gene-splicing progress "has
outdistanced the most optimistic forecasts" and projected dramatic increases in the sales of
biotechnology products.

Such optimism was also reflected in the prices of biotech company stocks. Genentech, the most
substantial company in the industry, came to market in 1980. During the first twenty minutes of trading,
the stock almost tripled in value, as investors anticipated that they were purchasing the next IBM at its
initial public offering. Other new issues of biotech companies were eagerly gobbled up by hungry
investors who saw a chance to get into a multibillion-dollar new industry on the ground floor. The key
product that drove the first wave of the biotech frenzy was Interferon, a cancer-fighting drug. Analysts
predicted that sales of Interferon would exceed $1 billion by 1982. (In reality, sales of this successful
product were barely $200 million in 1989, but there was no holding back the dreams of castles in the air.)
Analysts continually predicted an explosion of earnings two years out for
the biotech companies. Analysts were continually disappointed. But the technological revolution was
real and hope springs eternal. Even weak companies benefited under the umbrella of the technology
potential.

Valuation levels of biotechnology stocks reached levels previously unknown to investors. In the 1960s,
speculative growth stocks might have sold at 50 times earnings in the 1960s. In the 1980s, some biotech
stocks sold at 50 times sales. As a student of valuation techniques, I was fascinated to read how security
analysts rationalized these prices. Because biotech companies typically had no current earnings (and
realistically no positive earnings expected for several years) and little sales, new valuation methods had
to be devised. My favorite was the "product asset valuation" method recommended by one of Wall
Street's leading securities houses. Basically, the method involved the estimation of the value of all the
products in the "pipeline" of each biotech company. Even if the planned product involved nothing more
than the drawings of a genetic engineer, a potential sales volume and a profit margin were estimated for
each product that was even a glint in some scientist's eye. Sales could be estimated by taking the
"expected clinical indications" for the future drug, predicting the potential number of patient users, and
assuming a generous price tag. The total value of the "product pipeline" would then give the analyst a
fair idea of the price at which the company's stock should sell.

None of the potential problems seemed real to the optimists. Perhaps U.S. Food and Drug
Administration approval would be delayed. (Interferon was delayed for several years.) Would the
market bear the fancy drug price tags that were projected? Would patent protection be possible as
virtually every product in the biotechnology pipeline was being developed simultaneously by several
companies, or were patent clashes inevitable? Would much of the potential profit from a successful
drug be siphoned off by the marketing partner of the biotech company, usually one of the major drug
companies? In the mid-1980s, none of these potential problems seemed real. Indeed, the biotech stocks
were regarded by one analyst as less risky than standard drug companies because there were "no old
products which need to be offset because of their declining revenues." We had come full circle having positive sales and earnings was
actually considered a drawback because those profits might decline in the future.

From the mid-1980s to the late 1980s, most biotechnology stocks lost three-quarters of their market
value. They plunged in the crash of 1987 and continued heading south even as the market recovered in
1988. Market sentiment had changed from acceptance of an exciting story and multiples in the
stratosphere to a desire to stay closer to earth with low-multiple stocks that actually pay dividends. Nor
did the fate of the biotechnology industry improve in the 1990s. Although the stocks rose early in the
decade, they had a severe sinking spell toward the middle of the 1990s, with the popular Biotech Index,
which is traded on the American Stock Exchange, falling more than 50 percent from 1992 to 1994. By
the mid-1990s, the industry was losing money at a rate of $4 billion per year.

More was to come. Promoters, eager to satisfy the insatiable thirst of investors for the space-age stocks
of the Soaring Sixties, created new offerings by the dozens. More new issues were offered in the 1959-
62 period than at any previous time in history. The new-issue mania rivaled the South Sea Bubble in its
intensity and also, regrettably, in the fraudulent practices that were revealed.
It was called the tronics boom, because the stock offerings often included some garbled version of the
word "electronics" in their title, even if the companies had nothing to do with the electronics industry.
Buyers of these issues didn't really care what the companies made so long as it sounded electronic, with
a suggestion of the esoteric. For example, American Music Guild, whose business consisted entirely of
the door-todoor sale of phonograph records and players, changed its name to Space-Tone before "going
public." The shares were sold to the public at 2 and, within a few weeks, rose to 14.
The name was the game. There were a host of "trons" such as Astron, Dutron, Vulcatron, and
Transitron, and a number of "onics" such as Circuitronics, Supronics, Videotronics, and several
Electrosonics companies. Leaving nothing to chance, one group put together the winning
combination Powertron Ultrasonics.
Jack Dreyfus, of Dreyfus and Company, commented on the mania as follows: