Diversify and Protect Against Any “ATION”
Stock-Markets / Investing 2010 Apr 06, 2010 - 12:01 AM GMTBy: Brian_M_Thiesen
Much is said about how to protect against a rising tide of either inflation or deflation or hyper of either or stagflation.
Most of the time a one way solution is offered supporting the views of a certain writer/analyst/economist for various reasons.
“Real estate is the way” “The only way to protect is with Gold” “Stocks are a steal” “Bonds are the bargain of a lifetime” Likely at one time or another you have heard statements like this.
Looking deeper we should see and by now understand as either traders or “economic hobbyists” that in the past and especially now in todays volatile markets, a one way solution will likely become a one way problem for any style of investor even the best short term traders.
There are hundreds of examples of dumping all or most of your money into one asset.
How about USA homebuyers in 05 holding until now, how about gold in the early 80’s etc.
Now most advisors will advise to diversify your portfolio and this can be good protection in certain sectors against some unknown scandal like accounting that could bring one company down. In such a case you would not have “lost your shirt” (or your wardrobe.)
However what if that entire sector goes down? How does diversification help? (recently oil and other commodities or markets as a whole in ’08)
So it is not that diversification is bad but diversification of what?
All investors should do one divesrification that will help them forever and that is…..
Diversify YOUR SKILLS AS AN INVESTOR!
This means YOU ACTUALLY HAVE TO DO SOMETHING besides read someones advice or even their charts for that matter.
Have we not seen countless times analysts can use the exact same charts to tell many different stories? Or even the exact same theory? Have we not seen countless times that these same charts supporting one view support an entirely different view in mere hours?
Of all things not to be lazy about, investing your money is the top in my opinion as laziness will result in losses always has always will.
Even if you are just in cash your money can be attacked.
If you really want to beat any “ation” you must simply pay attention to the markets etc. and put your money in your own hands. Afterall who else hands should it be in?
(We already give enough to the government and look where that has us!!)
Learning proper strategies that work for you, your amount to invest and your objectives is the only way. This could be that you might have to look after you… Imagine that!
Markets can switch in a heartbeat and even if you cannot anticipate this to the “T” you should be able to see at least longer term trends that can eat away or more positively offer you more or better profits than the asset(s) you have allocated high %’s of your portfolio to.
Many call or consider their money their “baby” I wonder how many people would leave their “baby” at daycare and be satisfied with a monthly report of how it is doing or even quarterly etc.
As the old saying goes and is now more important than ever
“IT IS TIMING OF THE MARKET, NOT TIME IN THE MARKET”
Higher profits truly then are the only sure fire way to allow someone to become “lazy” as we know more money can make life much easier.
I am not advising to not buy this or that but I may be advising to not “only” buy this or that and not “only” buy this or that on “advice” but rather maybe spend a few hours looking into where your money’s going for it is likley it took many hours to be able to get that money in the first place.
If you do not have time to pay attention to your allocation then maybe consider as great as someone may make investing sound for “dream life, retirement“etc. consider that they will never tell you the other side of nightmares that have happened with much higher frequency and severity.
If you want to truly protect against anything this may be the only way. Making you responsible for you and your life, portfolio and family.
Afterall most of the people who have learned to “truly” diversify in investing are the ones that are the “laziest” with the biggest “baby” spending ever less hours getting money to invest and more time enjoying their baby!!!
Hopefully you are reading this before you engage in any painful lessons, but likely will not truly understand it until you do! Often the best investors if not the best investors of all time have been the ones to learn from any of these mistakes.
Brian M. Thiesen – Regular Guy
I am just a guy who has been trading and learning markets, geo-politics, history, human nature, etc. for the past while with really no education of merit to speak of other than reading articles and books from time to time. I grew up in a small town and tried to have since birth grow in whatever way possible. I love trading and markets etc.
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