Definitely avoid selling options unless you’re comfortable with the time value of money, offsets so they don’t get assigned (as LoK alluded to above), can cover any assignments, &c. However, buying options is safer in terms of limiting your downside, as worst case scenario they expire worthless so you only lose your up-front premium, and so that might be an amusing pasttime. I certainly want to get into it (buying, not selling) once I’m done with school.
In terms of goofing with trading/speculation, I always thought penny stocks and pink sheets would be fun. Doing research on poorly covered companies, buying those you think will get huge (either through a buyout offer or something else) and even trading them.
My idea with my 401k is to put 80-90% of the money into overseas. I figure with globalization and regression to the mean, it’s almost certain that over a long-term aggregate, it will do better then US investments over a 30 yr period.
Invest in Malaysia! My real estate investment trusts are up at least 20% this year. Based on current prices, the dividend yield alone, paid solely from rentals, is about 7 to 8 percent.
Don’t invest in Chinese stocks, unless maybe they’re listed and audited in Hong Kong. Their financial documents are all lies. We’ve had some high profile listings of Chinese companies in Malaysia and they all turned out to be duds.
Quoted to agree. I can’t imagine it is going anywhere and also consider what it was trading for just a 3-4 years ago. Aside from the reported losses, the threat of a new govt mortgage market entity is surely suppressing the price.
Also wacky-go-nuts. Our economy may be in the shitter, but it’s not like anyone else has a better idea or a more solid base right now. We’re seeing the implosion of Capitalism in the digital age, much like propeller futures after the first jets were introduced. Everything might be a shitty stock, but nationality has nothing to do with it. I would argue the right thing to do is stay liquid (or solid, if you were lucky enough a few years back) and wait for the fallout. Economics is going to be a different beast in 20 years, even if the big game changers don’t happen.
That would drive the housing industry to a screeching halt (with the economy right behind it). There are no private investors serving as a secondary market for mortgage lenders at even a fraction of the scale of FNMA & FHLMC. Banks and lenders would not be able keep all the loans they make in their portfolio.
If they axe FNMA & FHLMC, there damn well be a better solution to take their place (and there isn’t one now). And at this point, it is kind of like throwing the baby out with the bath water. The problem was with the lending they began doing in the mid aughts in order to try and keep up with the private investors. Republicans like to attack FNMA and FHLMC since they are Govt sponsored entities and they tied to initiate programs target low-moderate income markets (via low down payments and higher debt ratio allowances - which interestingly enough is the main selling point of FHA loans and FHA has not had nearly the issues as Fannie & Freddie) but the real problems were the private companies with their Interest Only, stated income, Option ARMs, etc products. That has stopped and new originations and the loans they actually buy should be of much higher quality due to the changes implemented both on the front end (actual income verifications, appraisal requirements, no IO, etc) and at delivery (actually trying to stop crappy loans that don’t meet their guidelines from even being purchased in the first place).
If the Republicans were actually in power, then it might matter. But with a Dem president, and no majority (not to mention a veto-proof one) in the Senate, the GOP is not in power. I would not expect to see an elimination of Fannie Mae. I will say this; there are whispers that the mortgage deduction will be eliminated in the next session so houses may not not be as an attractive as an investment.
2010 S&P 500 return (w/dividends reinvested): 15.1%
2010 Sidd’s portfolio return (mostly buy-&-hold index funds w/tilt to small & value, 94% or more equity throughout the year): 19.9%
Right after college, I put in my couple of years of active trading to see if I could beat the market. I would have made more just buying & holding an index fund tracking the S&P 500.
My 2011 plan? Pretty much the same as the last eight years. Eventually I’ve got to break even from the hell that was 2008, right?
Good luck in 2011 to all the board’s fun money speculators!
This is a long-term idea, not a short-term. My bet is not that the US will tank, but that the ROTW will do better. It’s simple statistics applied to economics. Eventually you’ll run into the cobweb theory of economics- but my guess is that will take 50-100 years.
The ultimate belief is that US standards and world standards will normalize at some point, and have been heading towards that point since globalization (and even before).
A diversified fund mitigates the instability risk of such investing. (Heavy diversity is important)
The real risks are WWIII or global protectionism returning in full force, neither of which I see is likely.
