Have a question in mind that you think is so dumb you’re embarrassed to ask it? That’s what we’re here for today!
This bonus post was inspired by a reader who wanted to know “where to ask a dumb question” here on Stock Gumshoe… and while his question was not actually stupid, and I’m happy to see questions pop up in our comment threads anywhere on the site, I thought it would be a great idea to open the floor and be more welcoming for the shy, the embarrassed, or, yes, even the uninformed.
So this is a no-judgement zone… smart people do things we’d call “dumb” all the time: Warren Buffett didn’t invest in Google in 2004, Albert Einstein married his cousin, and I just had to go back and double check that I didn’t call him Alfred Einstein (which I’ve done before, in print). So if you have that question that you can’t ask your stockbroker or your brother-in-law or Twitter without feeling like a dummy, let ‘er rip by submitting it below. I’ll be nice… and we might all learn something.
And yes, the SEC is always watching, so I must remind you that I can’t give personal investment advice… but I’ll try to share whatever opinion or answers I can provide to any investment-related question you’ve got, though if we end up with a lot of them it might take me a little while to answer thoughtfully.
So please, let your questions fly using the friendly little comment box below… and thanks for being the best readers in cyberspace!
(I will moderate the discussion just to make sure we don’t get too much profanity or offensive stuff, or personal attacks, but I’ll use a light hand — you can be mean to me if you like, just don’t be mean to any other participants.)
Right below the email for this “ask a question” is an ad from Harry dent proclaiming 700$ gold. Listen, Travis, if you advertise ridiculous crap like that you loose all credibility.
Three questions for Travis: Do you control what advertising appears? What do you think about your own credibility? How do you feel about people who asked questions in a snaky manner?
Not usually.
I can look at myself in the mirror without grimacing, and have been doing this for 11 years now, so I think I’ve built a track record of credibility and fair commentary… but I know some folks will object to our ad policies and question our credibility — sometimes because I make mistakes, sometimes just because Stock Gumshoe is not a non-profit. I certainly won’t please everyone.
I like all kinds of questions… I’ve been around long enough not to be offended easily.
We do host ads, both in the email and on the website. Stock Gumshoe’s revenue is split roughly 50/50 between ads and paid memberships.
We do not select individual ads to run, or endorse or choose advertisers, and we ask our ad brokers to reject ads from stock promoters, but most ads seen on the site are provided by Google or similar automated systems and we neither see nor review them — they might be different for each reader.
But yes, the presence of advertising absolutely creates at least the potential of a conflict of interest, and sometimes a comical one (sometimes a teaser ad might run on the same page as our solution to that teaser ad, for example). This is something I have thought about a lot over the years, and to some degree it’s a balancing act — I expect we would be more credible in the eyes of many if we did not host any ads, but then we would need to restrict more content to paying subscribers and would therefore tend to push paid subscriptions more heavily… either that, or it would just not be sustainable enough for me to commit a lot of time and resources to this endeavor.
Everyone will have to make their own judgements and draw their own lines there, but that’s the line we’ve drawn: We accept ads and use that funding to subsidize a robust free service, but we don’t endorse or qualitatively select or prioritize one advertiser over another, and we use outside “filters” like ad brokers to handle the individual ad selection so that ad selection is separate from our editorial thinking.
I’m a newbie here, so still lurking in the shadows. I find your analyses quite compelling and insightful, so about to join as a bona-fide card-carrying, paying member. So my stupid question is: how do I proceed? Given that you can’t give “personal investment advice”, would you have some “generic” advice, or even a reference to an article or write-up that does?
Paying members such as myself (Irregulars) get insight into Travis’ own stock holdings, and more importantly his musings about what he’s thinking about buying or selling every week and why, along with general thoughts on markets, companies, etc. It’s the best bargain in the investment world. Once you join you have access to every past Irregular article … there are hundreds of them, including many by other contributors. So curl up and start reading. There’s also something like five times as many free articles as Irregular ones, but those are mostly all about specific teaser solutions. You’ll never find advice, just facts and opinions for you to consider.
toff, great summary – well said, “It’s the best bargain in the investment world”
Thanks Nick, welcome aboard… my goal is not to recommend a specific portfolio for anyone else, but to share my experience in building my portfolio and hope to help readers think about their investing in different ways.
I do have plenty of opinions about what will happen to the market, to stocks, to my individual portfolio, but certainly plenty of my expectations are going to be wrong — I do find that writing about my investments helps me to be more disciplined about them, but the best teacher is experience.
If you mean “how to proceed” with starting investing, or learning about the market, we do have a thread of suggestions here that might be useful.
Not sure exactly what kind of generic advice you’re looking for — If you want advice about the mechanics of investing, or how to open or use a brokerage account or get your feet wet, feel free to ask away.
Can’t tell if you’re new to Gumshoe or new to investing entirely — If you’re just learning about stock investing, start small and choose a low-cost broker… I have been experimenting with Robinhood, which I really like for beginning investors because there’s no commission, so you can literally buy a single share of stock at a time and be thoughtful…”paper trading” to get experience without losing money is also a good idea, but in my experience, you never think as clearly about a theoretical investment as you do about a stock that you own, even just a single share. For a much broader array of investment options, including international stocks, it’s hard to beat Interactive Brokers… but IB is far more confusing and intimidating for new investors.
If you’re really brand new to investing, then buying that first share of stock and seeing how you invest and the share settles (and how you can sell it a few days later, if you like), takes away some of the first jitters. And it won’t feel like it, but the best thing that can happen is spending $100 on a stock and seeing it drop to $50 right away — that will give you caution. If your first stock doubles in six weeks, you might feel bulletproof and wise and throw lots more money at your next idea, which is how a lot of beginning investors get into trouble.
Understandably stock selection companies market via teasers, and you do a great job investigating those. It all seems like a faddish way to build a portfolio, though. How much of your portfolio, say, could you trace to investments touted in these kinds of teasers? Versus how much of a healthy portfolio consists of unsexy things like blue chips, index funds, bonds, etc.?
Teaser ads are a starting point to discussing and thinking about different kinds of investments, but unless you’re just trying to trade around the price impact that a newsletter’s promotion might have (not something I can do, though I’m sure some folks try), it’s not a way to “build a portfolio” directly.
I think of teaser ads as one way of generating ideas — at any given time it could be that 10-30% of the stocks in my portfolio are companies that I first learned about from a newsletter’s teaser ad… though that’s obviously not enough reason to buy a stock and hold it for a long time, which is usually my goal. Sometimes, also, a well-reasoned argument from a newsletter will cause me to take a deeper dive into a company than I would otherwise — which sometimes turns up an investment idea, whether it’s the one being teased or something else in that same sector.
There should be no portfolio allocation to “teaser stocks,” but that’s also not really a sector — some teased stocks are tiny mining speculations, others are big blue-chip dividend paying stocks. The common thread among them is that they have a compelling “story” that can be used to get your attention to subscribe to a newsletter — which isn’t necessarily bad, if the story has some reality to it, with some real fundamentals backing it up, and might also appeal to the market as a whole (a good narrative is a big part of what drives the best stocks — and can be a self-fulfilling prophecy in the best of circumstances, with companies like Amazon or Netflix, but a good narrative does not automatically mean a good stock).
I like to keep roughly half of my equity allocations in diversified funds and invest the other half in individual equities, and usually with the most speculative ideas I’ll make very small investments and follow them for a long time before I decide whether or not to ramp up a position to a substantial size.
OK, Here are some dumbs question from someone who knows little about investing: What’s with all the doomsday predictions that forecast a complete melt down with stocks plummeting, cash being worthless, etc. The other day, I got a doomsday scenario teaser from Stansbury, via another venue I subscribe to. Other people send me this kind of stuff too. Everyone I know is nervous. In reading these “articles,” it seems like there is no hope. We are all getting older and don’t have time to recover from another melt down. In ’08, I listened to one of these well known investment advisors and they said I should sell my state tax-free bonds, so I did. Over the past 10 years, I have lost a ton of money on that transaction. Then I had an advisor though one of the big banks. By the time I paid his fees and suffered through his buying and selling costs, I didn’t make much money. I now try to manage on my own. I wonder “do I listen to anything others say, especially the doomsdayers, or do I just carry on and hope for the best?” Is there any good, reliable and stable investment advisor out there with a decent track record that doesn’t charge “an arm and a leg?” Would love to find one.
Financial commentary is fundamentally a media business — and just like with your local news, the more spectacular or jarring the story, the more likely it is to make the front page or the evening news broadcast. Financial pundits are motivated to get as much attention as possible, and you get more attention by being dramatic — either by predicting 1,000% gains, or by predicting the end of civilization.
That’s been true since the dawn of the newsletter age, most famously with the conspiracy theories promoted by Bill Bonner that led to the growth of the Agora empire in the 70s and 80s, and that has inspired all kinds of followers — the goal is to get attention and get you in the door, not to be right. The more sober among them will admit, behind closed doors, that they are selling you something crazy in order to get you in the door, but that their real beliefs and predictions are for more nuanced and mundane… and that their actual paying newsletters generally provide much calmer commentary than the ads.
Anyone who is predicting what the market will do over the next five years is going to be wrong — and if they’re suggesting big moves to prepare for that forecast, you’re likely to lose a lot if you follow them.
Don’t forecast anything, but be prepared for everything — personally, I think the high market valuations mean our expectations for future stock returns should be lower from this point than stock returns have been over the past few decades… so I’m holding more cash than usual. But the market might surge 20% higher every year for the next three years, too, I really don’t know, so I’m certainly not selling everything just because I think we’ll have “lower than average” returns over the next 3-5 years.
Before hiring an advisor to select individual stocks or funds for you, I’d hire a fee-only financial planner to make sure you know where you stand, and how much money you’ll need and what risks you feel comfortable taking. Then, once you know what you can risk and what should be set aside in stable investments that you’re not going to tinker with (even if someone who’s commission-motivated wants you to buy and sell every year), read widely and learn about the market — take a smattering of newsletters if you like, but no expensive ones, and learn about different perspectives until you form a nuanced view for yourself.
I like to set aside some funds that are managed by people who are smarter than me and with good long-term track records, in solid low-cost mutual funds from Dodge and Cox and Primecap, for example, and in simple passive index funds, and choose individual investments for myself beyond that — but I also like to spend a lot of time on this, if you don’t like to spend a lot of time understanding individual investments, it makes more sense to just make a good plan with a fee-only financial planner, choose low-cost investments, and check up on them once or twice a year. You can get into trouble when commission-driven advisors want you to change to new funds every year or two to recharge their fees, but if you have a good no-commission advisor and a clear plan you’ll be less influenced by broker suggestions and can find your own path.
Why does everyone keep saying “Don´t forget to take your profits.” You sell because they know better than you, and after a while the stock continues to rise to become too expensive to buy in again
Because taking profits feels good… and if you’re a newsletter pundit, it lets you claim a “win”.
Much of this comes from managing your own psychology and knowing what is important to you — one of the few strategies that works most of the time is momentum investing (though when it stops working, it stops spectacularly), so a stock that is going up this week is probably the most likely one to go up next week… but we don’t live with a hundred different silos where we analyze stocks on their own, we live with portfolios.
One reason to sell is if your assessment of a company changes, but the weight or impact of a stock in a particular portfolio is also important, so you might also sell to take profits if a position has grown too large as a percentage of your portfolio. Large holdings in single stocks can make single-stock risk an uncomfortable thing.
With stocks that I own for fundamental reasons, when I think the underlying company is fairly priced and going to keep doing well and keep compounding earnings for years (and hopefully decades), I resist selling. With stocks that are very richly valued and being driven by optimistic sentiment and future dreams, my inclination is to “let it ride” even if the position grows quite large, but to also monitor stop-loss triggers with those “momentum” stocks, and reassess and often sell (or partially sell) those kinds of growth stocks if the stop loss trigger indicates that the momentum part of the trade is at least partially broken — particularly if the underlying fundamentals allow me to foresee the potential for a much bigger drop if sentiment shifts.
Hi Travis. Do you have a full time job? What is it? Or is this it ? Thx . Great info !
Managing Stock Gumshoe and writing for y’all is my full time job (and then some).
Any indication of a market crash coming this year?
Sure. We have high-risk global politics combined with historically high market valuations and rising interest rates. That triumvirate makes a long bear market possible, despite a US economy that’s doing quite well right now… and the increasingly indexed world means that any steep drop could turn into a crash, particularly in the least liquid areas of the market (like junk bonds, for example). But it doesn’t mean it’s necessarily predictable — crashes are likeliest when no one thinks they’re likely.
I have stock in a company that is using a “Dutch Auction” to buy back shareholders’ stock. What is your opinion on the advantages/disadvantages to the shareholder?
Generally fine if you want to keep holding — unless the company is borrowing a lot of money for a buyback, or doing a buyback at all-time high valuations, or buying back stock as a way to capitalize compensation (for example, offering huge stock options, then borrowing money to do buybacks to reduce the dilutive impact of buybacks), buybacks are generally good for patient shareholders because they increase the earnings per share and let shareholder value compound more quickly.
A Dutch Auction is just a way of setting the price based on what the market will bear, and whether that ends up being better than just a regular buyback program where the company or its bankers use judgement to sell in chunks depends on a lot of other variables. Most companies buy back poorly, doing big buybacks when the stock is at a high valuation — ideally, a cash-rich and relatively stable and profitable company should be doing buybacks when its stock is out of favor for cyclical or perception reasons, not just when investors are anxious for them to support a high share price.
Must be Abbvie (ABBV). They want to tender $7.5B worth of their own stock. Sure makes me curious about buying, although how it’s funded and management’s reputation for capital allocation are worth researching.
Travis-interested on your opinion of the 3 main Gene Editing companies-CRSP EDIT & NTLA-full disclosure I I think although they are pricey they will all be huge beneficiaries of what I consider to be this game-changing Biotech Area & hold positions with a 5 year time frame-possibly longer. I also believe that with both Big Pharma & large Biotech cos. struggling to find new drugs with important expiring patent protection, it is probable that one of these 3 will be acquired relatively soon & the remaining 2 will move up in a commensurate fashion. They will have hiccups along the way, but more bullish than I was on BLUE 5 years ago ( who btw they will impact some of their programs-all imo
I bought into all 3 companies plus $BLUE in early Feb $CRSP has been my best performer and all the others are in the black
I have a really hard time with R&D companies or very early-stage clinical biotechs — partly because it’s an end market that has completely opaque pricing (even without regulatory attention on pricing), so I can’t get my head around any financial model that makes sense for most biotech stocks. Established drug developers are different, they have a process and a pipeline and, when things are going well, a steadiness of revenue that pays for the R&D… but before there’s cash flow, the valuations of biotech stocks make no sense at all to me.
That’s not to say they’ll be bad, or that CRISPR won’t be revolutionary eventually, but my imagination is not good enough to commit meaningful capital to these ideas right now. I’ve written about all three from time to time as they’ve been teased (“God Key!”), those past articles are available by clicking the #topic links below, but I’ve never owned any of them.
I exited the stock market and went all in on crypto. Foolish or smart?
Foolish. Going all-in on anything is foolish.
I’m biased against cryptocurrencies, I expect, though do have tiny positions in bitcoin and ethereum still. Cool technology, but I expect 90%+ of them will end up being meaningless, and more than half will turn out to be little more than opportunistic frauds. For the ones that seem like they might be interesting businesses, I fear that people speculating on the “tokens” are not necessarily going to get any gains because they don’t “own” the technology or the business.
Hello Sir, I’m 27 and recently got into investing using about 250 USD per month to invest with. As of now, my target stocks have been large companies that pay some sort of dividend. I look towards China for my growth stocks because of the growing middle class in China. Do you think looking at China for these growth companies is a smart move? I know everyone is looking for the next Tencent or some sort of growth equivalent. In our research is there some companies to watch when it comes to China both new and older established companies (Don’t have to be dividend companies)? I just want to invest myself in a position that I know when old age hits me I’ll earn some sort of living from dividends or something.
Very Respectfully,
One of my hopeful China stock just came out. Its $IQ no dividends yet but could have a strong future…
Thank you I have been researching endlessly on China’s Market.
Hi Mason, sounds like you’re off to a great start. I agree that the long-term growth in China is compelling, and putting a portion of a portfolio into hopeful growth stocks makes sense for someone who has many years of working ahead — though dividends and dividend compounding is also a fantastic strategy (I’d think more about midsize-to-small companies with a track record of growing dividends, since you have time to see if you can identify the next giant early on, but the big guys have their place, too).
In technology, I think we’re increasingly in a “winner takes most” world — the economies of scale are so compelling, and the challenge of competing with entrenched leaders so hard, that I feel more confident in “big tech” in China than in smaller companies. I have exposure to Alibaba, JD.com and Tencent (through Naspers) right now, in addition to iQiyi (recently spun out of Baidu), and I think all will do well over the next several years… but, of course, they’re also trading at very lofty valuations, so any bad news will be really bad.
You have to make your own plan, of course, but I also started investing in my 20s — and learned a lot by making really stupid mistakes (like buying expensive, closet-indexing high-load mutual funds from a bank). The way I think of it, the wonderful thing about being 27 is that you should have time to make up for mistakes, and time (and mental flexibility, which sometimes drops with age) to learn from them. So set your retirement savings aside and make sure some of it is going to grow with the market, but now’s the time to use some of your savings as “play money” and try different investment styles and take risks.
Thank you so much for your words and I also bought most of those as well. I’m very lucky to have a few close friends in China that keep me up to date with new companies or opportunities. I just recently added NYSE: JP to my portfolio and really think they have a decent long-term future. If you want to take a look be my guest.
Wealth management is getting to be a huge growth business in China, but it also scares the heck out of me given all the dangerous “yield” investments being promoted to Chinese citizens… I’d have to research it more to get comfortable with the idea of Jupai, which I’ve never looked at, but thanks for the note.
$China stocks
FWIW Mason, my husband has been looking at $KBA Krane shares MSCI China A,
$CHKY China Merchants Bank, and
$PNGAY Ping An Insurance ADR
Bearing in mind that he gets these ideas from Agora/Stansberry.
Penny
Are we going to enter a bigger correction given the bull market for the last 8 years? And Travis, thanks for your detailed analysis and I enjoy reading your articles.
Bigger than what? I do expect we’ll have a 20-30% drop in the market at some point, just because that usually happens and it hasn’t for a long time… but putting a timeline on it is just hubris. Other than holding more cash than usual, and doing a little bit of hedging earlier this year, I’m not positioning myself for an imminent drop, just hoping that things will come down enough to provide some exciting buying opportunities in the next year or two.
I expect the market will be higher in ten years than it is today, and will hopefully do more than keep up with inflation (which I expect to rise), but I do think we’re likely to get a nasty period along the way. I think we’re in a period of pretty extreme complacency, both about the consequences of higher interest rates and higher debt levels and about stock market valuations and radically unprepared retirees, but that doesn’t mean the complacency is wrong — things often work out far better than I think they will, or the can gets kicked down the road in a way I wouldn’t have expected — just that I think it increases the chance of a severe downturn.
Then again, I’m surprised that the market bounced back so quickly from the dip in January, and a “BTFD” gung-ho market can keep going for a lot longer than you might expect. (BTFD, if you haven’t spent much time with stock and crypto jockeys on twitter who think they’re still in the basement of their fraternity house, is “Buy The F-ing Dip”)
What would you say the key indicators are of a great company at a great price?
It’s got a unicorn as CEO.
Just kidding… but not entirely. Those opportunities are rare, and usually come along only when the world is in a panic and sells off the good along with the bad.
You usually can’t buy a great company at a great price — you either buy a good company at a great price and hope the company becomes great, or buy a great company at a good price and hope you didn’t overpay too much.
For the long term, probably the best indicators are that they generate excess cash without having to raise a lot of new capital all the time, and have the ability to reinvest it for higher future returns, compounding that cash flow into ever higher future earnings. That means it has to have a large addressable market, an ability to grow without new capital, and a steadily high return on invested capital as it grows. The biggest thing that many investors don’t perhaps look at enough is how companies reinvest their capital to grow — and whether they can do so profitably at all (all companies try to grow, since executives are paid more if the company is bigger, but not all companies can easily grow profitably)
There are lots of ways to think about this, but I like to do a lot of screening just to get an idea of what the universe looks like. If you screen for ROIC that’s higher than the 5-year average, for example, and cut that down by adding requirements for revenue growth and a rational multiple of free cash flow, perhaps some ideas will pop up… but some of this is qualitative, trying to figure out which companies are in a good trend of generating cash and investing that cash back into growing the business without any foreaseeable hard “ceiling” on that growth.
Why do analysts tend to recommend a stock after it has clearly broken above its downward trend line and already made huge gains?
I’ve never been a sell-side analyst, but often companies don’t get analyst coverage until they grow or until they begin to need more capital — part of the reason an investment bank covers a stock is that they’d like to get business from that company (helping them raise money).
I haven’t noticed analysts consistently only recommending stocks that have “broken out”, but you definitely do notice analysts behaving as a pack — most analysts do not want to poke their head up and make a wildly different call than their colleagues, and they all took the same MBA classes from the same professors, so there tends to be some (probably unconscious) group think and clustering of ideas…. it’s safe to be wrong as long as everyone else is wrong, too.
It’s great that you “dope out” the information that newsletters push out and want the consumer to “bite” on taking out a subscription. But my “stupid” question is after you figure out what they are trying to sell , why don’t you create a’portfolio ” of your findings and keep a scorecard to actually see how well/bad your search was.
Thanks
We do track all of the stocks teased, at stockgumshoe.com/tracking — our answer for the stock tease and ID of the “secret” stock is essentially always accurate, more than 99% of the time (sometimes I’m at least partially guessing, which I do note at the time, but most of the time it’s absolutely clear — I usually have about one real blunder per year).
I hear all these “technical” types yammering about charts and various patterns that supposedly predict future stock behavior and can be used to drive investment decisions. My overall feeling is that they might as well be prognosticating over a pile of goat entrails. Is there any actual evidence that “technical analysis” works any better than just paying attention to the usual fundamentals of a company?
https://www.investopedia.com/university/technical/techanalysis2.asp
I think this is a good place to start. There are viewpoints and evidence of the efficacy of charting and technical analysis. There is also evidence to its contrary. I haven’t been trading very long but one of my favorite books on the subject of trading (not investing) makes a good case for technical analysis. The book is Market Wizards, by Jack Schweiger.
I empathize with your quandary as I’ve gotten tossed back and forth between those opposing viewpoints on trading. There’s also an independent advice that states: to be in the market one must decide whether he/she wants to be an investor or a trader. An investor goes by fundamentals/ valuations, which is based on historical data. A trader goes by technical/chart analysis, which is what’s happening with the stock today and, very likely, the near future.
My personal viewpoint is: what’s wrong with doing both? As a first step, I listen to/read up on analyses of experts. They’ve been in the market for decades or have their own proprietary systems which analyze fundamentals. If I’m interested in the stock, I take the research process further by looking at its chart. Is it in the Supply (Sell/Overbought) Zone, or Demand (Buy/Oversold) Zone, or somewhere in between? So while fundamental analysis should not be ignored, chart analysis helps in determining when to enter or exit a trade, or just sit tight for now.
Like yourself, I would welcome the opinions and experiences of others not employed by newsletters and brokerage houses. Travis has already earned my respect — which is why I am now an Irregular. Reading others’ experiences is a definite bonus.
Apparently I *did* find a stupid question. 🙂
Travis do have an opinion on WHO is a solid conservative INVESTOR coach, such as Motley Fool, Stansberry, Dent, Wyatt, etc.???? Is it worth paying for stock pick advice?
It’s not worth paying to buy a stock recommendation, and slavishly following a newsletter portfolio is not likely to beat the market, but it is worth paying to read an interesting editor who has a point of view and analytical style that you can learn from. Reading widely is easier now than it has ever been, and reading the work of people with strong opinions and rigorous analysis is always helpful, even if you don’t agree — I love reading Grant’s Interest Rate Observer, for example, even though much of the commentary is about bond investments and I don’t invest in individual bonds, and I rarely invest in the stocks they cover.
Read the free commentary that most newsletter writers put out as bait — not the ads, but their free articles. That will give some idea of whose thinking makes sense to you and provides you with a different perspective, and maybe some of those folks are worth subscribing to. You can also get an idea of what other readers think by checking out our newsletter rankings pages.
The goal is not to find a coach or a guide, I don’t think, it’s to find a lot of teachers and to learn from all of them. Lots of thoughtful institutional investors and money managers write a lot as well, usually for free, and that’s worth checking out — I’ve particularly been interested recently in following the commentary of Vitaliy Katsenelson (Contrarian Edge), Morgan Housel (Collaborative Fund), and Patrick O’Shaughnessy’s “Invest Like the Best” Podcast (at Investors Field Guide), all free.
Do you have any thoughts on FNMA and FMCC and the legal proceedings regarding the net worth sweep being enacted by the government?
I find the logic compelling, that private investors shouldn’t have been cut out of the cash flow after Fannie Mae recovered, and that there should be a more robust private backstop to the mortgage market instead of a nationalized entity… but I have no idea whether those angry investors will make any progress in court.
Then again, the whole idea was stupid in the first place — it worked to democratize home ownership, but basing a whole class of bonds on the idea that they were “implicitly guaranteed” by the government created a lot of the risky investing behavior that brought down everything after the real estate crash, particularly when Fannie Mae shielded all those institutional investors from loss. The lack of real risk of loss and the presence of bailouts incentivizes risky behavior that hurts us all in the long run. If the government’s going to underwrite the loans, they should just do that and keep the income — if they’re going to let private capital in, they should let those private investors lose money.
Is there any way to invest in Blockchain technology like an ETF that invests in a bucket of Blockchain technology stocks?
http://etfdb.com/themes/blockchain-etfs/
I believe $BLOK is one of the more popular ones.
I am 63, retired (but could return to work), and earn a small income from an Airbnb rental that supplements Social Security. Most of my savings is in an Edward Jones mutual funds account, fairly conservative with emphasis on income-producing, and couple of small Roth IRA’s. I am not touching them. However, I started dabbling in cryptocurrencies and some pot stock, in which right now I have about $2,000. I am following advice not to risk more than 1% of my assets or what I can afford to loose. I am doing this as much as for the education and enjoyment than expecting a huge gain, but that is certainly a hope. Am I crazy for putting any of my limited income into such investments or do you think my strategy is okay?
I can’t give personal advice, and don’t know what your life is like — but as you lay it out, it doesn’t sound like risking 1% of assets is worrisome.
You could easily spend more than $2,000 traveling or playing golf or taking your biannual trip to the casino, and stock speculation is a perfectly fine hobby that might provide better returns than most. Education and enjoyment is a good return for any hobby.