Regular readers know that over the years I’ve taken suggestions on how to invest my new Roth IRA money for the year. It’s that time of year again. Give me your best suggestions.
Before you do, let me clarify a few things. To a great degree, this is meant to be fun. It would be ridiculous to take investing advice from strangers who don’t know your risk tolerance, asset allocation, and other important details. So take it a little seriously (I’m not investing in pork bellies), but not too seriously.
That said, I always give readers a little guidance:
- Value-Driven – As some might have noticed with my individual stock purchases over the last couple of years, I love stocks that have been beaten down. I like to buy equities at a discount. I feel it gives me some protection from it going lower and a “return to the norm” can lift it up.
- Diversified – I have enough individual stocks. I’m not looking to hit a home run by investing in some biotech company that may grow 20% in a year… or bust on an accounting scandal. This is about slow and steady winning the race.
- Give Me Risk – I’m 38, and I plan to live to 138. So with a hundred years to go, I’m focusing on great returns, not necessarily safety. Let’s be aggressive.
I’m also going to give an example of something that I’m strongly considering: BRICs. BRICs are an acronym for Brazil, Russia, India, and China stocks. Some of you may remember the BRIC craze in 2007 or 2008. I haven’t heard much about them in awhile, and looking at the value, it seems like that’s a good thing.
I know there’s a ton of risk of investing in Russia, but it’s likely to be less than 25% of this investment, which would be less than 2% of my whole portfolio. If all the Russian companies in the index went to zero, I would still be fine. On the flip side, it seems like things might get better over the next hundred years and their stocks will appreciate.
There’s a sign that things may be turning around for India and China as well. I saw news today that their indexes are at one-month highs. It’s a positive sign, but maybe I should have bought into BRICs a month ago. The value may not be the best it has been, but they are still diversified and an aggressive growth play.
So give me your suggestions. I hope to be active in comments with you.
J. Money says
Okay, here you go.
Invest $5,500 into the J. Money Career Fund :) In return, you’ll get 1% of all future earnings of his working life.
That checks off #1, #2, AND especially #3! Haha… Deal or no deal?
Lazy Man says
I know it is a joke, but that would be a seriously tempting concept.
Andrew Tobias has been plugging a stock, ticker BOREF, that makes a neat product for moving passenger jets on the tarmac.
GLORIA JOHNSON says
VirnetX (VHC)- they have won a huge patent lawsuit plus ongoing royalty rate against Apple, Apple has appealed, we are awaiting the Appeals court decision however the Appeals court has tipped their hand by remarking in another decision that the District Court’s original decision in awarding VHC the big settlement was sound legal judgement. We expect the Appeals decision to uphold the District Court. This will give VHC stock a good bump up. This is a speculative stock for sure but has excellent future prospects.
Why not just pick up some good quality common stock – something like AAPL, DIS, MSFT or KO are all pretty good bets. Nothing like a solid dividend yield and increasing profitability to juice your bottom line.
Lazy Man says
I’ve thought about that. I had bought AAPL at 495 and MSFT at 31 not all that long ago. I’m not sure about buying in at these higher prices. I’m thinking that Citigroup could be a buy. I know they have their problems, but they have a nice P/E and if they work through a few of the problems it could turn out nicely for them.
Still, I’m not sure about going with more individual stocks. I’ve done a lot of that lately and I feel better holding a little more in broad indexes.
Au Bon Pain. Surely the open lawsuit against them is depressing their value, since the demanded amount is more than has been and will ever be produced by all of humanity between now and the heat death of the universe. It’s a private company so you’ll have to convince the board to let you buy them out.
Lazy Man says
I wouldn’t be very convincing. I had a conversation with my wife this last weekend, how much I don’t like their offerings. I’m a big fan of protein and not carby grains.
I’ll have to look into their lawsuit, but I have the feeling it will feel like small potatoes compared to what I know. Then again I’m much closer to my own thing. And yes I’m being purposely vague.
Tommy Z says
Consider the “Sell in May and Go Away… Then Buy Bombay.”
Consider putting 50% of your money in INDL (3X Long India ETF) and the other 50% in SRTY (3X Short Russell 2000). India has a newly elected politican that should do wonders for the country meanwhile US Small Cap stocks are way overvalued.
The Stock Trader’s Almanac examined the Dow from 1950 on and found that $1,000 invested in the market on November 1 and sold on April 30 every year grew to $78,171 by 2012. If you invested that same $1,000 in the market on May 1 and sold on October 31 each year, you’d have just $891 by 2012.
Because the Dow comprises only 30 stocks, other larger indices were analyzed to check the validity of the hypothesis. Ned Davis Research examined the S&P 500 over the same 30-year time period and found similar results: $1,000 grew to $75,539 during the November-April period, and to just $1,032 during the May-October period. In 2002, another pair of researchers, Bouman and Jacobsen, extended the analysis to the international equity markets and found the same effect in 35 of 37 countries.
More info here:
Lazy Man says
With the S&P up less than 2% this year, I’m not quite so sure it is going too bad.
It looks like some of the research was greatly effected by two extreme data points as explained in this article: http://www.cnbc.com/id/101630987… specifically “the October 1987 crash in world equity prices and the August 1998 collapse of Long Term Capital Markets.”
It might not be a bad idea to go 3X long India, but that is a little extreme for me. I think the BRIC thing makes sense as it gives me some India and also some buying Russia on the cheap.