Investing

The one rule in investing that everyone agrees on seems to be to keep your portfolio in balance. This means that based on your appetite for risk, you proportion your investments among different assets. As a simple example, say you want 50% stocks and 50% bonds. Suppose your stocks do well for a year or two, while your bonds languish. At the end of two years, you have 60% stocks and 40% bonds. At this point, you are supposed re-balance your investments by transferring 10% from stocks to bonds.

This means, if you didn't notice, that when one investment is doing well, you should not throw more money at it, but take money away from it. If you are making money in stocks, you should take some of that and put it in bonds, which are loosing money. In general, this suggests that if an investment is doing well, this is a strong indication that it will soon stop doing well, and vice versa. In other words, a fundamental rule of investing is that the best indication of a good investment is that it is doing poorly, and vice versa. I'm heading off right now to invest in Ames and Somalia.

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Edit: I thought I was kidding when I posted this, but I did a little research, and guess what popped up? This quote, for one thing:

"If the past is a guide, you might expect some of the worst performing stocks in the first decade of the 2000s to be among the best between 2010 and 2019." (USA Today)

Looks like I'll be hitting up American Airlines and Kodak Cameras.