I'm interested in this, if I only understood something like 25% of it. I'm reminded Warren Buffett's maxim to never invest in something that you don't understand. It's why he avoids Silicon Valley-like tech companies, because their valuations never made any sense to him, despite everyone else throwing money at them like mad men. It sounds like there's still a hungry giant pool of money with an army of twitchy investment managers looking for something to invest in. But there just aren't as many good investments as there are investment dollars. I sense from this guy that their will be ugly downstream ramifications of all this stupid money being thrown around. And his prescription for making it to the other side is good old fashioned value-investing. But, and I can't quite tell, it seems like he's also wary of some larger, systemic failure. Which I, for one, am not looking forward to trying to wade through. Is there anything that a young person with next-to-zero capital can do to get through this? Because it sounds like he's shitting on S&P 500 indices, which I thought was the one sure-fire thing I could do.
One of the arguments made in the article is that "value investors" such as Buffett are having a much harder time making money at the moment because the Fed is basically acting like an insurance company to protect the companies that aren't valuable. This, in turn, drags down the value of the ones that actually make money: Continuing: https://fortunedotcom.files.wordpress.com/2015/02/buybacks1.gif Have a steady job, a rainy-day fund and as low a burn rate as you can manage. What he's saying is that the money you'd get from ETFs isn't what it used to be, and probably won't ever be again, and everything else is worse. That's pretty much the big point he's been hammering on lately: passive income is becoming much harder to come by no matter what form of investing you want to try on. I know this: I follow a lot of blue chips and they rarely move. Most of them are sort of floundering towards negative. Yet the stock market is up like 2 trillion in the past three months. And when you look at the stocks that are popping, it's all tiny shitty biomeds you've never heard of, pharmas that jump from $3 to $4 because something or other made it through a trial. Me? I invested in a birth center.I'm reminded Warren Buffett's maxim to never invest in something that you don't understand. It's why he avoids Silicon Valley-like tech companies, because their valuations never made any sense to him, despite everyone else throwing money at them like mad men.
"Where do the Fed’s policies most prominently insure against financial risk? In low quality stocks, of course. It’s precisely the companies with weak balance sheets and bumbling management teams and sketchy non-GAAP earnings that are more likely to be bailed out by the tsunami of liquidity and the most accommodating monetary policy of this or any other lifetime, because companies with fortress balance sheets and competent management teams and sterling earnings don’t need bailing out under any circumstances. It’s not just that a quality bias fails to be rewarded in a policy-driven market, it’s that a bias against quality does particularly well! The result is that any long-term expected return from quality stocks is muted at best and close to zero in the current policy regime. There is no “margin of safety” in quality-driven stock-picking today, so that it only takes one idiosyncratic stock-picking mistake to wipe out a year’s worth of otherwise solid research and returns."
It sounds like there's still a hungry giant pool of money with an army of twitchy investment managers looking for something to invest in. But there just aren't as many good investments as there are investment dollars. I sense from this guy that their will be ugly downstream ramifications of all this stupid money being thrown around.
Which I, for one, am not looking forward to trying to wade through. Is there anything that a young person with next-to-zero capital can do to get through this?
Because it sounds like he's shitting on S&P 500 indices, which I thought was the one sure-fire thing I could do.
This is where the smart money is anyway. Not a birth center, per se, but in building a business. Passive income is great if you can get it, but going out and creating something from nothing is the real way to build capital (the thing capitalism is supposed to be built on). Small businesses create ALL the jobs in the last several decades, and their the only places left who think of people as people and not as employee ID numbers. Passive income is a great supplement if you can get it, but we should never forget what the engine of the economy is. Fuck the Fed right now. That emperor lost his clothes long ago.Me? I invested in a birth center.
Stop telling young men to go to college and instead tell them to get invested in a trade they can excel at. A computer is not going to drive across town at 2AM to fix a leaking toilet. A robot is probably not going to be able to rewire existing buildings, and someone is going to have to do the welding and metalwork when the robots break down. One we got that world problem solved, tell the same young men to stop watching television and stop buying shit you don't need. Save, buy property, live cheaply and invest in your skills, get certs, etc. The more I read about the markets, the more I think you are the one who is going to come out the other side with your bankroll still intact.Have a steady job, a rainy-day fund and as low a burn rate as you can manage.
Me? I invested in a birth center.