Wednesday, July 30, 2008

risk and uncertainty

As the local hobbyist economist, I find myself constantly plied with questions for which I don't have readily prepared answers. The inability to predict  and recommend less risky, more sound and profitable ventures somehow impinges on that reputation, because someone who thinks himself informally educated on that subject should be overflowing with policy suggestions, right?

Yes, I can easily parrot what other notables have advised, such as Jim Rogers or Peter Schiff, but I've found that taking the role of an economic Cassandra quickly turns off people who want to hear that everything is fine and dandy in our mixed-economy.

Personally, I've been looking for "the answer" too; I'm been considering transferring my little nest egg into various non-dollar assets, be that less-volatile foreign currencies, but especially into ventures such as

My take on the U.S. 'security' markets is exactly that; a bitter joke since I've yet to profit from any of the shares I've held in mutual funds. The minor amount of amateur stock trading I've tried hasn't been encouraging and the strategy of buying "solid companies" hasn't paid off for me as there has been no appreciation on those fronts. 

The only success I've had came from investing in technology companies for which I've had early knowledge of upcoming growth. For example, prior to the introduction of the XBOX 360, there were rumors circulating in the tech circles that Microsoft was talking with ATI to handle the graphics and was going to shun Nvidia which powered the first XBOX. Seeing that there was no public announcement of this, it did me well to purchase ATI shares which greatly appreciated when the announcement came some time thereafter. I've also had success in buying shares in Apple when it was at its $19 low in early 2003  sometime before the 3G iPod was released. I was positive that this was going to be a turning point for Apple to once-again become a household name. No more than six months later Steve Jobs was profiled on the cover of Time Magazine holding the 3G iPod.

But even with those success stories, it is certainly nothing I could duplicate on a daily basis; they were one-off type of bets. The only way to reliably make money in the security markets is to collect commissions from gullible folks who think that their broker knows his stuff. A big thank you for that goes to the S.E.C. for its role in keeping the people stupidly complacent in this regard; after all if they are 'regulating' the markets, people can automatically trust anyone to look out for their best interests, right?

As for real estate ventures, I made a decision back in late 2006 to exit the field for the meanwhile, and luckily so. I still follow developments in this field, but for the most part I am disgusted with how the U.S. Imperial Government is assuming new powers to further distort the market and stem ultimate recovery.

This is the point where I hold out my hat to solicit some spare financial advice from my imaginary readership, e.g., how they've diversified their wealth. What I'm really looking for is a liquid type vehicle, something from which I would be able to regularly withdraw funds to pay for living expenses; something I'm not sure easily accomplished, say if I want pay an American Express bill with savings.