Wednesday, December 13, 2006

Investing for idiots

this guy at Stuff.co.nz is an investment advisor?
All of us that can handle the advanced concept of percentages can see the logic in his approach but if he thinks anyone in the real world is going to pass up a million in the hand today (and potentially tomorrow) on the vague promise of bucketloads more later on is an idiot - i mean, he even mentions the uncle is a bit scatterbrained.
I think the eco-fundy term is 'front loading vs back loading'. If you are risk averse (and by adverse here, you're talking only a few measly millions rather than stonkingly large amounts) you would place a premium on liquidity and the ability to diversify constantly. If you are a returns junky, you'd double up every day hoping that the house of cards holds up long enough for you to pull out just before it goes belly up.
Seriously, you have to wonder why anyone over the age of 50 is telling you to pour every cent of your worth into the stockmarket on the assumption that the world will behave the same for the next 50 years as it has (selectively speaking) for the last 50. Could the baby boomers be pulling yet another free ride? Not content with spending their inherited assets, they're trying to borrow from the next generation?
Compare and contrast the analogy to house prices, mutual funds and govt policy is left as an excercise for the reader.
FTB - wanna join my cult?

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