Here are some points to ponder that may help narrow your starting point choices for the
most viable and realistic investments.
In todays marketplace there are endless investment options to choose from. When trying
to choose, its best to discuss and analyze some of the basic pitfalls of each.
Keep in mind the many risk management factors and be sure to perform proper due diligence.
If you choose using advice from an investment counselor, the same rules still apply … until the
investment advisor has proven their worth. Then, ofcourse, its your own opinion as to what
has worth and value verses whats drivel, to you.
I would recommend obtaining at least 3 different ” qualified ” opinions even if the investment risk is
very slight. However, another train of thought is, If you keep doing the same type of investment
and keep losing the minor amounts of money, you will have lost both the time AND the money.
So its kind of a difficult situation finding a comfortable balance for how much time is spent verses
how much money is at risk. Doing extensive research will chew up tons of time very quickly. And possibly
simply confuse the issue even more.
Maybe people should think about the term, ‘value investing’. What is ‘investing’ if
it is not the act of exploring to seek out value at least sufficient to justify the amount
of money paid ? If people consciously pay more for a stock than its actual calculated value
– in the hope that it can soon be sold for a still-higher price – this should be labeled as
speculation (which is neither illegal, immoral nor – in our view – financially fattening).
Whether appropriate or not, the term ‘value investing’ is openly used. Typically, it
connotes purchasing of stocks having characteristics and attributes such as a low ratio of
price to book value, a low p.e. ratio (price-earnings ratio), or a high dividend yield.
Unfortunately, such characteristics, even if they appear in combination, are far from the
total truth for determining as to whether an investor is indeed buying something for what
it is worth and is therefore truly operating on the principle of obtaining value in his
investments. Then, alternatively, opposite characteristics – a high ratio of price to book
value, a high price-earnings ratio, and a low dividend yield – are in no way inconsistent
with a ‘value’ purchase. Therefore, Buffett’s definition of investing is the best
definition of value investing there is. Value investing is purchasing a stock for less than
( sometimes MUCH, MUCH less than ) its calculated value.
If we hope to effectively reduce or completely dismiss ALL risk, we are only dreamers.
However, if someone has alternative options of which i am NOT aware of, please share.
i.e. The market and marketplace changes day to day and /or by the minute, or second, right ?