Everyone always wants to know about the next biggest thing in terms of fashion, technology, cars and even investments. Although there are some merits to having the latest and greatest and most up to date trends, it is important to consider a wide array of options when it comes to your broker recommendations. Often times, the latest and greatest investment opportunity may be a recycled idea with a better presentation of something already in the market, while other times, you may be on the brink of the multi-billion dollar idea.
The next big opportunity
During a strong market, it is easy for investors to simply ride-the-wave of an existing trend and enjoy the rewards if a solid and valuable investment strategy. In most cases investors would rather ride the wave of small profitable investment as opposed to a larger return in an investment which may be alternative to their comfort exposure.
When the economic crisis in late 2008 and early 2009 started chipping away at these profitable investments, it became obvious that these tried and true investment methods of the past are working out quite so well given the current economic conditions. Investors started looking into alternative investments and began stepping outside their comfort zone a little to find the next big investment opportunity.
On
e area which has continued to prosper has been in the precious metals and other commodities market. We have seen the price of gold literally skyrocket in recent months which has indicated that many investors who normally would shy aways from such investments actually taking to gold and silver as a means to not only protect their financial net worth but also to realize some profits as well. Another popular strategy has been in the hedge fund and private equities market which have traditionally only been available to investors with high net worth. The dynamics of real estate have also altered in that opportunities which would have seemed impossible just a few years back have become abundant, while other real estate investments which seemed a sure thing have resulted in bankruptcy.
While not all of these ideas are terrible, in fact, many investors have realized significant gains in these types of investments, there are some things to consider before jumping head first into any investment outside of one’s normal comfort zone.
Alternative investments
In reviewing hundreds of alternative investments, I like to break the investments down into common practical and everyday thinking in terms of profitability and usefulness. At the height of the technology boom, technology companies were bringing on investment capital to create the most basic functions of technological advances. The first cell phone, laptop computer, even mobile tablet device. These were the framework of what we have today. At a time when most investors were looking at the large manufacturers of the final piece of equipment, often times, the smaller individual component manufacturers were creating the technology to move beyond a single use and more towards a use that will remain for years to come.
Think about this for a minute. How often do people upgrade their cell phones with the latest and greatest gizmo being marketed. What is often overlooked is the hundreds of internal components inside the actual unit that matters. Manufacturers who developed the technology to use their components in virtually any cell phone device have done well.
Startup companies have an excellent potential in that their ideas are usually passion driven based on a current market need. Passion driven based on making a product or providing a service that isn’t readily available or has not been improved to the point of mass production.
To be continued …
The Only Investment Guide You’ll Ever Need: Newly Revised and Updated
Personal-finance guru Andrew Tobias slams online trading and praises the Roth IRA in his newly revised The Only Investment Guide You’ll Ever Need. This investment bible remains as stimulating and meaningful as it was when it was first published 20 years ago. It’s packed with ideas about stocks, living beneath your means, tax planning, retirement, and just about everything else in the financial world. And all of it is presented with Tobias’s trademark brevity and ingenuity.
Last revised in 1995, the guide takes aim at a new game in town–online trading. By all means, use the Internet for buying a car or for research, Tobias says. But avoid cyberspace brokers, he says. Point and click enough and you will get slaughtered by commissions, spreads, taxes, and human nature. “It’s so easy to click ‘OK’ a few times and make a $10,000 bet,” he warns. “Look how mesmerized we become on a stool in front of a slot machine. Internet investing positively teases you to play.” Tobias’s favorite new entry is the Roth IRA, which allows you to withdraw your money tax-free when you retire. It’s far better than a traditional IRA, he asserts. “Save yourself the trouble of agonizing over the choice and go with the Roth IRA,” he writes. “Forget the worksheets.” Sometimes caustic and always a skeptic, Tobias believes readers can shape their own financial futures. Just stick to the basics, he says. “By and large, you should manage your own money, via no-load mutual funds,” he writes. “No one is going to care about it as much as you.” It doesn’t matter if it’s 1978, 1998, or even 2008. The Only Investment Guide You’ll Ever Need still is exactly that. Some things never change. –Dan Ring
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