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Play the Invest Lazy Man’s Money Game (and Win $25)

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It's that time of year again. I have made a sizable deposit into my SEP-IRA and Roth IRA and I'm asking you to help me invest it. I have a bit of a twist this year though. Due to my private stock investment paying off, I might have a little more cash that usual this year. I'll probably be waiting a few months for that train to roll into the station (i.e. the deal to go through).

I figure that I could start going through all my traditional investment options and preferences, but what's the fun in that?* Also, what's the point of having a website without being able to crowdsource some ideas every once in awhile? I'm asking you to help me out by providing some ideas on how to invest my money. I'll give one person who gives a good suggestion that I end up using $25 via Paypal or Amazon/Ebay gift card. Even if I don't end up using the suggestion, I'm probably going to give $25 to someone with the best suggestion. (I say "probably" because I've had some giveaways with no quality entries.) To help guide you here are some things that I will look for in determining a winner:

  • Ignore asset allocation - Yes asset allocation is important, but I would have to give you many details as to my current investments, which are spread across many accounts.
  • I like ETFs - I've always preferred them to mutual funds. I think it's because the ETF equivalent of most indexes seem to have a lower expense ratio.
  • I like value - A few years ago (maybe nearly a decade ago now) I saw that energy stocks were beat up and I invested in them. I like to buy things that are "cheap" as long as I don't see the industry going away.
  • I like sector funds - They have more diversity than a single stock, while having the ability to outperform the general market.

Enter by leaving your suggestions in the comments. I'll stop accepting entries on Friday 11:59 PT and will announce the winner soon after. Be sure to include your real email address so that I can award you the prize. I will only contact you if you win and never disclose your email address in any other way.

* Note: I actually find it very fun to go through investment options and preferences, but I'm trying to appear to not be a total dork. The minute that I publish this, I will begin my research and bury myself in glorious stock and mutual fund graphs.

Posted on May 2, 2011.

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13 Responses to “Play the Invest Lazy Man’s Money Game (and Win $25)”

  1. Ok – since you like ETFs, gold is at near-record highs, and the economy is improving: why not short a gold-based ETF (I think it’s possible, but I’m no ETF expert). Apparently gold mining stocks aren’t on the same tear that gold itself has been on; but these are possibility as well…

  2. tom says:

    Don’t time the market :) You may think something is of value and have been successful in the past, but continue trying to do so and you’ll lose over the long run.

    There’s your advice.

    My other advice… stick your extra $ into 50% US Market ETF such as Vanguard Total Stock Market, VTI and 50% into international such as Vanguard All-World Ex-US ETF, VEU.

  3. I like your thinking, I also like to look at beaten up sectors.

    Lately I’ve been looking at the iShares Mortgage REIT ETF (ticker symbol REM). It yields over 8%, plus it should do well as the housing sector recovers, whenever that is. The biggest holding is over 20% of the fund, which is a bit of a negative for me. For me anyway, it looks interesting.

  4. Contrarian says:

    Ok Lazy – here’s a stock idea:

    Forex (FXCM): It’s a recent IPO and not super cheap at $12.72/share, but it may be a good hedge against the continued debasement of our paper money.

    This is a long term macro bet (vs. my preferred bottom up investment) that people are going to look for ways to hedge the US Dollar over the next two years. Gold and silver are great hedges, but they have had huge price runs, so it’s hard for me as a “contrarian” (like Matt above) to justify following the crowd and buying in at these lofty levels.

    Here’s my thesis for FXCM:

    As recessions go the latest has been, statistically speaking, a garden-variety recession. What is outrageous and unprecedented is our government’s response: Aug 1929 –March 1933 government stimulus was 8.3% of GDP. Nov 1973 –Mar 1975 government stimulus was 4.0% of GDP. July 1981 – Nov 1982 government stimulus was 2.8% of GDP. Dec 2007 – Present government stimulus is a wopping 29.9% of GDP (and counting)!

    QE1 and QE2 are the disingenuous names given to massive money printing by the over-educated PhD’s, academics and monetary scholars at the FED. It’s hard to imagine a scenario where our dollar doesn’t crash hard in the years to come, and when this happens, people will be scrambling for ways to protect the value of their falling dollar. FXCM provides the platform for people to trade out of US currencies into other currencies. I don’t recommend currency trading any more than I recommend gambling in Vegas, but people are going to do it, and FXCM is a bet that they will.

    All of the usual suspects (Gold, Commodities, Equities w/pricing power, etc.) are great hedges but all have had a big % gains over the last year in anticipation of the the above mentioned paper money debasement.

    In my opinion, one idea that “Mr. Market” has yet to recognize as possible strategy to hedge against the coming currency Armageddon is owning the stock of FXCM.

    – Contrarian

    P.s – If you buy the stock you owe me $25 gift certificate. If the investment is a loser (in 2yrs) I will reimburse your $25. If the investment works out – then you owe me lunch! ;-)

  5. cynthia rafler says:

    You will probably hear this common theme in many of your contest entries. Buy Gold! CNBC has been running an ongoing special called “Apocalypse 2012”. Whether you believe the world is in for a big change or not, people are profiting from end of the world fears and if the world changes, it is likely gold will become currency. Here is an interesting link from the show: End of the World Fears Help Fuel Gold Rush – http://www.cnbc.com/id/42253645
    I tend to be an optimist and feel that this is just a warning that people are going to heed and change, so thank you for the many give aways and Happy Investing!

  6. pkeller3 says:

    How about Global X Lithium ETF, NYSE:LIT, a lithium based ETF. With ever increasing numbers of hybrid and electric vehicles that need batteries, the demand for lithium isn’t going away any time soon. Holdings are about 70% materials and 30% electrical equipment.

  7. Look for stocks that are being punished by investors.

    BP is a good example. Terrible about the spill, but if you took a look at the possible scenarios and adjusted for the tax effect, you’d see that while it was going to be a bad year for BP, it wasn’t going to be crippling. This was a massive company with good financials and every reason to believe they would return to profitability. When the price was hovering around $30, I was telling anyone who would listen that while it might take some time to rebound, an 18 month investment in BP was a safe bet. A friend of mine made a couple grand in about a month before pulling back out.

    There may be a second opportunity for BP as they pursue their lawsuits against their partners. Transocean, et al are certain to attempt to portray BP in a negative light … but there’s a real chance that BP is going to get some money as a result of the lawsuits.

    Ford was slightly different example. When GM and Chrysler were on their death bed and asking for a bailout, Ford was joining them in front of congress. However, Ford was in much better shape (in relative terms) and wasn’t asking for bailouts. In fact, it made sense that Ford should be gaining market share at the expense of GM and Chrysler, especially among the “Buy American” crowd. Yet, Ford’s stock was being lumped into the “failing US automakers” segment.

    I’m not saying that every stock being beaten with a stick is a great buy (most certainly not), but at times angels rush in where fools fear to tread …

    Yeah, and do some ETFs and a few other acronyms while you’re at it. :)

  8. Brian says:

    I’m going to stress the international ETF’s. I’ve heard good things about places such as Brazil and Singapore. If you want safer investments, I agree that an overall international ETF should work wel. Even then though you can diversify into different sectors of international including small cap. I know Schwab has a few which is what I use to invest.

  9. I’ve been watching fertilizers for well on 2 years now. The first stock was too expensive to buy. The second one I got on the upswing. I purchased MOS at $39 and watched it hit it’s 52 week high of almost $90. I am in a buy and hold position and this stock has receded back to $70 but I think that there’s some value there and that it’s ripe to be sold by the parent. So I fertilizer, rare earth, mineral sector. :)

  10. Kent says:

    I’ve got 2 stocks that I’m invested in that I’ll suggest. I’m generally a covered call writer on stocks that have pretty good financials to generate returns, but these 2 I’m holding for the longer term

    CIM: Chimera Investment Company, a REIT. Invested in this one because it trades below $4, and has a .56 annual dividend, so over 14% dividend return. I only bought this for the dividend.

    SVNT: Savient, a pharma company that this year had an FDA approved drug for chronic Gout treatment. This week it “missed” earnings and has been beaten down to under $9 per share. Company is trying to go it alone as a small company marketing their drug and has significant start up costs and such. They also bungled an attempt to sell themselves earlier in the year (necessitating the need to go it alone). I own this one because I think there will be demand for the drug, and there is potential for a big pharma buyout if they can get their act and sales together.

    Both fairly risky for many reasons, good luck!

  11. Mike Zoril says:

    As you may be aware, silver prices have run up greatly only to come crashing back down to earth this week due to higher margin requirements set by COMEX. I believe this was “rigged” because JP Morgan held a huge short position against Silver and was losing so much money, that they had to call in some favors at the COMEX. You can only manipulate the market for so long before capitalism wins out. With that said, let me continue my pitch for silver…

    Let’s say you have two choices:

    1. Buy silver or
    2. Buy a company that mines silver

    Now, let’s say today’s silver price is $25/ounce and the cost to mine silver is $15/ounce. The company that mines the silver therefore makes a $10/ounce profit.

    Fast forward a few months. Now let’s say the price of silver is $50/ounce.

    If you invested in the metal, your return would be 100% ($50 vs. $25). If you invested in the company, your return would be (theoretically) 250% ($35/ounce profit vs. $10/ounce profit).

    So, with this example, you can see that investing in a company that mines silver creates LEVERAGE to the price of silver (with no borrowing or interest cost to do so).

    Now here is the weird part. Silver did go up from $25/ounce to $50/ounce recently, but the silver mining companies LAGGED. This makes no sense and the market is mis-pricing the mining companies.

    Then, silver crashed from $50/ounce to where it is today at $35.62/ounce. This dragged the silver miners down even further!

    As a result, we have a huge gap between the price of silver and the “fair price” of silver mining companies. This gap is going to close and there is a way you can profit from it.

    Let me show you a visual example of this gap. Look here:


    Now here is what you do to make some money off this. For every $600 you have, buy $400 of the Silver Miner etf (SIL). Then buy another $200 of the 2X inverse silver etf (ZSL). This will create a hedged position which means when the price of silver goes up, your SIL investment will make money but your ZSL investment will lose money and vice versa.

    Basically, you do not need to predict the direction of silver. All you need to do is sit back and wait for the market to correct the gap between the price of the metal and the value assigned to the silver mining companies, which is off by about 20% right now.

    Interesting, right?

  12. […] This contest will be over by the time you read this, but I thought Lazy Man and Money had a cool idea. You tell him what to invest in and he gives $25 to the idea he likes best. […]

  13. […] Play the Invest Lazy Man’s Money Game @ Lazy Man & Money […]

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