Introduction

Introduction:

I decided to publish my random and daily thoughts in a blog. I will address investment ideas even some that may make a reader significant money. 

However, there are three challenges that every investor and/or trader must understand about themselves.

1. How much do you really understand?  The more you intend to make, the more risk is associated with the investment.  Possibly the only understandable asset is cash in the bank returning .01% interest.  One knows the amount in the bank, and is (almost) gauranteed to get the return.  (So, if you understand then, cash is an excellent place to be in deflation, and a horrible place to be in inflation.)  As one moves up the risk/reward ladder, understanding the asset is more complex.
2. How do we (any investor) invest senisbly and suitably?  Asset investment is complex, but one thing that I learned from wealthy investors in NY - simplify the portfolio and use asset allocation.  Any asset allocation scheme is better than no allocation.  I use "risk based" portfolio allocation, and for several years I applied fairly complex mathmatical algorithms.  Now I simplified that scheme into very low risk, low risk, medium risk, and high-return high risk.  Every year I change the allocation percentages.  I rebalance once a quarter.  I admire Kiplinger's approach, although I will stick with my approach.  Goldberg recommends investing in 3 index funds - US index, International equities, and a bond fund.  That is not a bad mix.
3. How do we invest simply?  May I suggest reading "The Richest Man in Babylon"?  One starts by saving something for oneself, and she then puts that into a very safe investment until it grows.  One learns about simple and safe investments, and as one's experience grows she branches out into more complex areas.  She then looks for opportunities with people who know how to make money in business. The caution is that most of the investment newletters on the market are dangerous to your financial health.  The cost is not in the newsletter, but in really the losses the investor takes when using their recommendations.  The challenge is finding a person that can mentor you.  The more you learn, the better investor you will be.