WHERE TO INVEST?

I recently came into some money that I wasn’t expecting and now I need to decide what to do with it.
As it was a total surprise albeit a very welcome one I suppose I could simply go out and buy stuff I think I want but don’t really need. True I got along just fine without this money before so what would it hurt if I blew the lot?

So, I got to thinking about all the things I could do like buy a new car, take an exotic holiday, buy an even bigger TV or the latest phone and other gadgets or maybe some new furniture. Then I remembered a friend of mine when I was growing up. His father passed and left him around $600,000 and within a year he was pretty much broke and ended up selling all the cars and other stuff he had bought at a fraction of their purchase price.

Then I started to think about investing it and that’s when things really started to get complicated. Did you know that the average person spends more time agonizing over their weekend sports picks or the features they want in a car then they do about their investments?  As for retirement planning or saving towards retirement that doesn’t even get a look in.

I could invest in equities but which ones? The US market is hitting new highs on the euphoria of Trump. That in itself is strange as everyone said the markets would tank if he won.  So, we have the unknown of a new president taking office in January which may or may not bode well for equities. Besides I am a lazy investor in that I like to buy and hold and this maybe isn’t the market for that. And even though emerging markets have been beaten down and should do well over the long run…..maybe I should pass on them too for now.

What about an investment advisory service? I mean there are some really good ones out there and some of my friends run some of these and do quite well. But it seems like a lot of work setting up the brokerage account, learning how to use it and then reading through all the newsletters following their picks and doing exactly what they do when they do it. Sure, it may only take 20 – 40 minutes a week but with everything else going on I just don’t have that sort of time and what if I join just as they enter a losing streak?

Perhaps property is the way to go after all property always goes up, right?  After having the same house on the market for about 8 years on and off I am a little wary of this.  Besides its too illiquid for me and the way properties have gone up maybe there isn’t that much upside? Plus, as I wouldn’t want to live in it I would need to worry about tenants, damages, landlord insurance, rental insurance and a whole host of other things which seems too much like work to me.

Then there is Foreign Exchange (FX) which is the most liquid market in the world at about $5.1 trillion dollars traded per day. I actually became involved in FX trading about 6 years ago, to help a friend out so during this time I have pretty much seen what works and what doesn’t.  Personally, I don’t have the temperate to manually place trades and watch their progress because when they are up I am happy and when they are losing I get extremely depressed and it makes no sense to give something that much power over me.

Besides I have learned over the years that most 3rd party EA’s that’s the automated expert advisors you can buy, either don’t work or only work in certain market conditions.  So, a few years ago, I created my own EA and investment strategy and they do OK but luck can play a big part in your success.

Here is a graph from one of the EA’s I created.

 

This is where luck and timing play a part. If you invested on the 1st of January 2015 and held till the 15th  of November 2016 then you made 37.86%.  But if you entered any time after February 18th 2016 which is trade 185 where the black arrow is then at best you broke even but, most likely lost.  Worse still if you got in September 2016 then you would have dropped 19.28% in a matter of days.

So armed with this knowledge I made one small change to the EA and as long as market conditions continue as they have for the past 2 years it should do OK but who really knows with any certainty what tomorrow will bring. So, now with this modification instead of finishing the period with a return of 37.86% it ended at 73.31%.

 

Granted this is fully automated so I really don’t need to do a thing but, I do find myself watching from time to time and letting the performance swing my moods. So, for this money that I want to invest I might give FX a miss as well.

How about a hedge fund? After all they are supposed to be able to make money in a rising or falling market…….so maybe that fits my set and forget lazy investment strategy. But when I looked at their performance lately they aren’t doing so well with the average hedge fund making about 3.53% for the past year or so which is an improvement from the previous year that ended with 1.73%. Other issues to consider are the high minimum investment amounts, performance fees of about 20% of all profits.  On top of this they tend to employ a high degree of leverage so when they are right they win big but being on the wrong side can really hurt. Add to this the  longer lock in periods they typically have and it may not be where I want to invest this money either.

Then I went off on a totally different tangent and looked at more venture capital/ disruptive type  technology investments that required a lower minimum and the payoff if I was right would be huge.  Think of being involved in Apple, Facebook or Microsoft in the early days or maybe even some new technology that changes the world for the better making it a safer place to live. I actually found one that met many of my criteria and made sense.

After the devastating effects of the massive earthquake  that hit Japan in 2011 and subsequent Tsunami or more recently earthquakes in New Zealand, Indonesia and Italy and also living in Vanuatu for 11 years and being through my fair share of earth quakes. I thought it would be awesome if there was some way of predicting these far out in advance.  From what I was able to discover Japan was spending over $1 billion on a system that could give around 1 minutes notice.

In my search I came across a technology that’s been around for over 30 years and gives warnings days and in some  instances weeks in advance predicting the magnitude of the quake, epicenter and even the peripheral danger zone.

So, while I really really like this earthquake prediction technology I might look for something a little more conservative.

I think what I am looking for is an investment that doesn’t take huge risks, doesn’t require a brokerage account or any effort on my part. One that isn’t affected by markets swings or central bank policy. An investment doesn’t use leverage and where I can just put the share certificates away in a drawer and forget about them for a while without worry that’s its going to blow up or lose my money.

Ok while I may have gone around the world to make my point it is a true story and this was actually my decision making process with this money but after all was said and done and I weighed all my options Forget The Market  FTM  seemed like the best choice for a lazy investor like me that wanted to see my money grow without taking crazy chances and allow me to live my life and not worry about what was happening in the market.

Article by Endre Dobozy

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