Investments: What 2008 has in store?

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ExercisePhysio

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Anyone feeling seriously nervous about their investments for this upcoming year? I'm seriously contemplating bailing out of what I'm in (Intel/Apple/Suncor/Syncrude/a few Chinese companies) and moving to bonds and other more secure investments.

Any thoughts?

Michael
 
I'm riding it out. But I'm mostly in funds. I wouldn't ride it out if I was in individual companies... too risky with this volatility and uncertainties.
 
Fair enough. I've decided to go full throttle into what I would normally consider risky stocks.

Cameco, Pinetree, and a few natural gas refineries + haulers.

A couple people have labeled me as insane for this. C'est la vie.

Michael
 
Now is the time to do it if you're going to. I don't mean timing as in market flux. I mean timing as in age.

Do you do anything on the safer side? Like equity-oriented mutual funds?

Hopefully when you get out of school, you'll have a 401k plan, or something of the like, to utilize as your long-term, safe (relatively speaking) strategy.
 
I do investments for a living. I manage people's savings and retirement investments. I manage a fairly big dollar amount (but that doesn't mean I'm better than anyone).

Basically, what you wanna do as an investor is take as much risk as you are comfortable taking. If down markets have you anxious and wanting to bail out of the stock market, maybe you shouldn't be 100% in stocks over the long haul. Making big changes in asset allocation costs investors about 2% return each year ("Irrational Exuberance", "Psychology of Investing"). So, if you weren't comfortable with the market swings you may wanna reduce your % in equities, but I wouldn't do that until at least the middle of February if you did.

If you're young and have less than 50k invested, you might as well be 100% in stocks though because you do not have "a lot" to lose. Once you amass a greater amount of money to the point that you are nervous about losing it, then maybe scale back and add in some bonds, real estate, and cash.

I think you're courting a bit too much risk by focusing (100%?) on materials stocks (do you mean trucking & rail by "haulers"?).

What I try to do day in and day out is get into areas that have a good risk/reward picture. If some thing has run up a lot, I'm going to trim back or sell; if an area has come down in price or hovered for a while, then I may investigate.

I think funds in general are a good way to invest since the manager of the fund is going to make adjustments to market conditions. As long as you aren't chasing hot returns by moving money to and from funds, you should do all right. With individual stocks, if a given one represents more than 5% of your portfolio, then you are generally taking on too much risk (Modern Portfolio Theory). As investors we wanna get paid for the risk that we take.
 
Heya...

Ya, as of now I do have less than 50k in the markets, and I have a high tolerance of risk.

Market swings do not bug me.

Yes, I do mean trucking and rail by hauling (but 95% is trucking...very little rail)

I'm not interested in funds at the moment because of reduced returns. Obviously when I have increased equity and financial means I'll diversify.

We have RRSPs here for long-term savings, but I honestly have no interest in them until I reach a certain income bracket.

1. I put 10k into PNP - Pinetree Capital Ltd. - Google Finance at 4.18
2. I put 10k into CCO - Cameco Corporation - Google Finance at 37.10
3. I put 15k into PHN - Phoenix Oilfield Hauling Inc. - Google Finance at .24

All my money in 3 stocks...good choice? heh.

Michael
 
If you're going to go with individual stocks, at a minimum you should do 5 stocks. Think of it like this, you wouldn't just give yourself risk unnecessarily; you want to get paid for the risk that you take. PNP and CCO looked fine (they aren't big momentum plays which can be dangerous). You may be waiting a while on PNP since it is a holding company but if it is FOR SURE worth more than where it is trading then patience will serve you well. PHN is gonna hurt as long as the price of oil stays up there. I don't think you should be in PHN at all actually, penny stocks are a recipe for disaster... Penny stocks are a pure gamble, you might as well go to Vegas and bet all that money on "black" or "red".

As far as the RRSP, I'm not keen on the tax laws in Canada so I can't give much advice. In general you want to balance your dollars between taxable accounts and tax-deferred accounts so you have maximum flexibility. If you're employed and your employer offers a company match, you should definitely take advantage of that (it's free money).

I don't think that trying to KILL the stock market will serve your best interests over the long haul. I have a client that is very anxious to retire by age 50. We've been matching the performance of the stock market with 70% of the risk of the stock market. He wanted to take what we do and leverage it (this was in Spring 2007). I said I didn't feel comfortable adding leverage if there was a chance that he would have to take the leverage "off" in an emergency situation.

I don't really know much about Canadian mutual funds, but it is possible to invest in mutual funds that get good performance with much less risk. I invest almost 100% in mutual funds and we've out-performed or matched the stock market performance with only 70% of the volatility (this is net of mutual fund fees and the fees that we charge for our services).

Let me put it a different way... Would you perform surgery on yourself or use a drug store assistant for medical advice? If you weren't into nutrition and exercise, would you get advice from a schmoe like me or a professional like Steve? Though I'm certain you're very smart, doing your own investments would be like using an untrained person for a critical part of your life (yeah, you may get by, but you're adding stress and increasing your chances of failure).

It does have to be tough to find individual stocks in Canada that haven't already shot to the moon, so I do admire you for that.
 
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Heya! I guess I want to put money in other things, but that is all of my liquid assets in the entire universe!

Oh well, at least I'll have an income in 4 months. Lol?

I do want to diversify but I'm also a risk-taker...and I sometimes think I can do it on my own. (Honestly, I think i need to get burned first...as my first foray into the market with primarily intel/apple was hugely successful.)

RRSPs are our version of 401k...they are tax-deferred until you take them out...our income tax brackets are generally

10-35
35-70
70-105
105+

So the tax savings arent worth it until i at a very minimum make 35k a year heh, and i likely wouldnt consider it until i break into the 70-105 category...which will be a year...my first year of full-time employment will be 08/09.

Wish me luck! And throw stock advice to me if you can...ill need it in may/june when i start to diversify!

Michael
 
Cool. My main advice would be to sell the penny stock completely. The other two stocks looked like they were OK (that doesn't mean they'll do OK, you're simply not grossly overpaying for hype or whatnot).

Yeah, if you made a bunch of money on either AAPL, GOOG, or RIMM then you shouldn't have a big head. You got lucky. Everyone knows that AAPL, GOOG, and RIMM will be successful companies, but it is just a matter of _how_ successful. That's the big trick. Take for example TASR, everyone thought that 50% of police departments would buy taser guns. It ended up that around 10% did, so if you look at a longterm chart of the stock you will see it's earlier runup and crash.

AAPL, GOOG, and RIMM have all exceeded people's wildest expectations, so they've done well but they can't continue to be perfect. Well, maybe GOOG when it takes over the world.
 
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