I've never blogged on CAPS before, and am I starstruck! This is the life! I have 5+ helpful pitches, I'm ranked in the 90th percentile... you like me, you really like me!
Okay, I feel a little guilty about shorting all those bond and ultrashort ETF's... but only a very little. Meanwhile, the big gainers and laggers in my CAPS portfolio are elsewhere: an excellent (if easy) underperform call on VG (pun intended), and a FSLR pan that's not panning out (yet). I want to share some thoughts on the economy, stock investing, and youth.
First, the economy is having some trouble with housing and credit, and while credit-market bears would call that an understatement, I disagree. For one thing, almost everybody still has a job. You know, that thing other than your house that you get money from. And yes, the loss of spending money from people undergoing foreclosure is going to have an effect on retailers and whatnot. I just don't think it's going to be all that big of an effect.
Most of the people suffering now are people who went out on a limb to buy a house they couldn't afford, those that lent them the money to do so, and those that invested in the securitized loan packages created by the lenders. No one I know is going through foreclosure. In fact, no one I know knows anyone going through foreclosure. Some are unable to sell their houses when they want to, and for the price they want (and could have gotten a year and a half ago). Sure, neither I nor most of my friends was ever able to afford a house anyway, but the point is, we didn't buy anything we couldn't afford, and most of us never will. There are many more like us, and it is our work, savings, and investment that drive the economy, not consumerism. (Sorry JMK, but you were just plain wrong.)
Second, as a young man with a job, and very little in the way of financial obligation, I invest in stocks that I think are likely to go way up, not in domestic large caps (except on rare occasions, and not in mutual funds, or bonds, or CDs. I don't hold cash for very long, either, even though I know I should sometimes. But if anyone can afford to invest all their cash in the face of what might be an oncoming secular bear market, it is I. "Why?" You well might ask. Because I'm young and have a job. Think about it: if a long-term, secular bear market is on its way, who will suffer? Those who aren't pouring their cash into well-chosen small caps (or other good inestments) that whole time (whether because of spending their income on other things, pulling money out of their investments because of retirement, or just plain old fear). Since I am as likely as anyone to have a job in any circumstance, and have the intestinal fortitude to invest in small, undervalued companies continuously throughout a secular bear market, I stand to gain a lot more from a bear market striking early in my investing timeframe than from a smooth, northeastward climb.
Third, I am investing not to get rich quickly, nor am I concerned with momentum. I want to retire with a modest lifestyle, and write full time, and do whatever else interests me. I don't want a BMW, I don't want an enormous house, and I certainly don't want a huge account I can gaze upon with greedy pride. I just want back the time I would otherwise have to spend working. That's all. I intend to use investing to keep as much of that time as possible, but I'm not going to spoil it by rushing through things or worrying about paper losses in a day or a month, or even a year. I'm just going to keep evaluating 20-30 stocks on the basis of div yield, payout ratio, debt, PEG, and a mushy consideration of how I feel about their respective fields... as well as comments in articles, on CAPS, and other sources.
When you get right down to it, I've found a relatively easy way to invest that I think is going to work in most cases. I enjoy it. I'm not worried about it, but I'm hopeful and attentive. I believe in doubling down. I'm in this for the long haul.