Suggestions For Timid Investors

What dark clouds gather over the pile of debt stacked by decades of mismanagement by the American populace and its sold-out leaders.

I sit here in my office surrounded by dire investment reports calling for the end of the financial system, warnings of a “cliff’s edge” dead ahead, a prediction of the US entering its own Greek-style default, and projections of another 70% fall to come in the stock market. Whew!

What’s an investor to do in such times? I suggest that taking a weekend for a good old fashioned fourth-of-July barbecue would be a starter. There’s no rush in this business, and I’d say that’s especially so these days. This economic malaise, whichever variety it turns out to be, won’t be over before you’ve had plenty of time to consider how you want to work it.

I suggest that you think about investments with a little safety built into them. For example, dividend-paying stocks are the gentlemanly way to go, as opposed to the piker route of pure capital appreciation. Dividend yields are fat now, so if you can put up with lots of price volatility to get 5-10% yield on companies that probably won’t disappear, it should eventually look to have been a smart move.

Don’t forget real estate, either. I know, the housing market isn’t doing well these days, but isn’t that when you’d prefer to be a buyer rather than a seller? Prices seem to be falling again, depending on the area, and rates are still low. If you’re not ready to pull the trigger, at least aim the gun. Know what you want to buy and at what price and rate so that if the pieces of the shattered puzzle settle in at a moment of serendipity, you can pick up that gem of a place you thought you’d never get a shot at.

Finally, look at non-traditional investments like art and collectibles. They are the least affected by goofiness in Washington, and can do pretty well. Old movie posters for instance, outperformed every other “asset class” in the past decade, even though almost nobody considers them to be an asset class. Too bad there’s no check-box on your 401(k) sheet for old movie posters, eh?

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  1. Zack
    Posted July 4, 2010 at 1:43 am | Permalink

    Great article! Happy Independence Day to everyone!

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