Silver Is Crashing! Oooh, The Humanity

sel_69l, let me put it this way. I made well over a million dollars investing in stocks and mutual funds. Like Buffet and Lynch, I bought into good companies with strong sales and balance sheets. I did not "time the market".

Clearly, there are times NOT to be invested or just buying things to be buying them. This is not timing. Timing is when an investor sets themselves up as knowing more than the market and then they invest accordingly. On VERY rare occasions, this works. But investing is more than just about that once in a great while thing going well. It is about doing what is good for your financial health MOST of the time. This does not work every single time but it does work more often than not. And that's the key to investing... winning more than we lose because all investors will do both.

Using stops and trailing stops effectively is another very useful technique that protects investors from large market declines. Again, this is not timing either. Perhaps what we have here is a failure to communicate? Or at least a difference in definitions.

As to losing money... sure, I've done that too. About $220k in 2001 and about $270k in 2008. It happens. Unfortunately, most of these losses occurred in retirement plan accounts where stops were not available. My other accounts did not have that problem, so losses were minimal there.

Again, the trick to doing well is to not panic and sell out in the depths of a down market. By remaining fully invested, virtually all of that "lost" money has been returned. Money, like the tide, rolls in AND out.

Only United Way puts all its begs in one askit. While you're young, you can afford to make stupid mistakes and take risks, but diversity becomes a better idea as you age.

I'm not familiar with the details, but as long as you don't insist on having it in your grubbies (as a coin collection), you can invest in PM like AGE and ASE in your 401k. The advantage is instead of earning $300 to pay taxes and have $200 left to buy PM, the full $300 buys PM for your IRA/401K.

Ask someone who does self-directed IRAs.

Actually Ed, I agree with you. I think someone else made the comment about not caring about what Warren does.

True, but notice they've been net sellers since 10/10.

What happens to your portfolio if PMs crash?

Putting all your eggs in one basket only is wise if you have total control of the basket.

Re: PMs in IRAs / 401Ks

I've never heard of a 401K plan that had PMs in it, other than as part of a mutual fund that invested a small fraction of its money in a copper / silver / gold producer. Not saying that this doesn't happen but it is pretty rare if it happens at all.

IRAs are another matter. People have a great deal of flexibility as to what they can invest in with an IRA. The term "self-directed" as applied to an IRA seems a bit confusing, though. AFAIK, all IRAs are self-directed. At least, no one ever gave me any investing advice about what I could buy for my IRA. I suppose that if it was in a limited partnership or some kind of annuity that would be one thing. In general, though, we can buy quite a few things for an IRA. ASEs and AGEs are perfectly acceptable. These are bullion coins with just a bit of numismatic value to them. Coins that are high in numismatic value or of foreign origin would not be acceptable in an IRA. Don't know about Maple leaf coins. The US and Canada have a pretty cozy relationship on some things and this may or may not be one of them.

See the following URL for IRA guidelines:

http://www.journalofaccountancy.com...nvesting.htm

And the winner is... behind Door #2!

Bill Gross is nobody's dummy. The fact that he sold off ALL of the US Treasuries in his giant PIMCO bond fund is hugely significant. If he won't own them for his clients, why the heck should any of us? He knows a LOT more about bonds than we do and he has well and truly left the building.

While US Treasuries have their own set of problems, bonds in general have a lot of problems too. The biggest of them just could be the fact that US interest rates are at rock bottom and really only have one place to go... UP! When that happens (not if), bonds of all kinds will get hammered.

Instead of bonds, consider short term money in Ginny Mae funds. Watch these very carefully, though, as rising interest rates will hammer these too. They are very liquid, though, and can be bought / sold quickly. For the next 3-4 months, though, they should be OK and pay better than CDs, money markets, and short-term bonds.

Longer term money can go into dividend paying stocks or the mutual funds that buy them. A lot of stocks out there are paying dividends of 4% or so, which is better than the 10-year US Treasury bond. Some pay even higher than that and also offer some upside potential via growth / price appreciation. I would FAR rather have $50k in 4-5 dividend paying blue chips or utilities than in ANY bond. The time to buy bonds is when interest rates are high and the Fed is leaning towards cutting them.

Well said, Fred. That was succinct and accurate.