Re: Investing

From: Brian D Williams (
Date: Wed Jun 07 2000 - 11:37:30 MDT

From: "altamira" <>

>I used to believe strongly in saving and investing. At one point
>in my life I had a pretty impressive net worth. Then in the late
>80's two things happened to depress the Texas economy: there was
>legislation which radically altered the federal tax treatment of
>real estate, which caused real estate prices to plummet; and
>around the same time, the price of oil fell dramatically, which
>also had a depressing effect on the Texas economy. Suddenly,
>people who'd been good risks (financially) couldn't pay their
>bills. Even if you'd made secured loans, your collateral would
>often be tied up in bankruptcy estates. My business went belly-up,
>and many of my investments lost half or more of their value.

Lets not confuse investing in real estate with investing. Despite
13+ corrections of 30% or more and 35+ corrections of 10% or more
the stock market has averaged an 11% average yield for over 75

>The situation in Texas in the late 80's was just a minor glitch,
>but living through it has helped me to extend my imagination to
>visualize more extensive economic depressions. Saving money for a
>particular expenditure, such as starting or expanding a business,
>buying a house, etc. makes quite a lot of sense to me. But
>investing just for the sake of investing doesn't, unless you
>appraoch it like playing a game, for the fun of it. (An exception
>to this would be if you have inside information about a company or
>companies you're investing in.)

>If your goal is to have money to live on when you retire or to
>self-insure for medical expenses, the best investment over the
>long term is probably to hold relatively short-term low-risk bonds
>until they mature. When they mature, use the proceeds to purchase
>more of the same. Because the bonds are low risk, they'll also
>carry low interest rates, but there's a high probability that the
>money will be there when you need it. Because they're
>short term, you can hold them to maturity without suffering damage
>from inflation.

I would argue that short term low risk bonds are only appropriate
for short term surpluses you might have.

A good place to read about this in depth is at, and go
to Fool (not fool) school.

>My opinion is that the net economic effect of the stock market is
>destructive for some of the same reasons socialist economies don't
>work well. I'm waiting for permission from a friend to quote a
>piece she wrote about the stock market.

Read the piece, didn't agree with it at all, but your milage may

Perhaps someone in the know here could comment, but I don't believe
banks are allowed to invest in the stock market directly. Most of
your money shouldn't be in banks anyway.

See Fool School for details.....


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