What is your current investing strategy? How do you feel about the different investment...?

I will focus on my approach for IRAs here. I also own rental properties to hedge against a weak dollar and inflation. The properties are professionally managed and throw off small before-tax gains. Never buy real estate unless you have renters taking care of your mortgage, tax and insurance costs for you. And get yourself a tax accountant who owns investment properties him/herself to maximize your after-tax gains.


If you want to get rich quick, stop reading here. Feel free to hand over your money to the scamster or casino of your choice. Investing means buying assets that produce income. Buying assets in hope of unusual price gains is called speculation and should be discussed separately. The two terms are constantly confused. Some people call buying overpriced luxury goods "an investment". I recently saw a posting for a $48,000 Hummer from a guy who claims he "invested over $110,000". I disagree with his choice of words.


It is challenging to condense my investment portfolio approach into a short answer. Let me try:
- The first thing to do is to stop feeding the broker. Brokers get fat from the commissions. I use FOLIOfn.com and pay $300 a year to make hundreds of trades per month.
- The next thing is to acknowledge that even the professional stock-pickers produce poor average results. 80% of the fund managers don’t even beat S&P500 results. So why should we, on our limited time, try to beat them? Select a bunch of low-cost (ideally below 0.2%) ETFs with good P/E (price per earning, 16 or lower) and P/B (price per book value, below 2) numbers to build a diversified value-focused portfolio. Include about 20%-40% bond funds. With no end in sight for the weakness of the dollar, make sure you include basic material, energy and international ETFs. Then stick to that portfolio and only make changes when better (lower cost, better value) ETFs present themselves or when you want to cash out on unusual gains. NEVER change your portfolio after a crash. Build your portfolio with a crash in mind. You might also want to keep 5% of your assets in cash to profit from an unusual drop in asset prices.
- If you just get started (let’s say with a lump sum from an IRA rollover), never buy into your new portfolio all at once. Ease into it with a small initial buy, the do buy-rebalancing transactions over a period of several months. This method is a sophisticated version of dollar-cost-averaging.
- Do not believe what most financial advisors tell you about risk. The riskiest portfolio is the one that somebody else is managing for you for a fee. The second riskiest portfolio is the one that you don’t rebalance on a regular basis. Rebalancing your portfolio allows you to manage risk by cashing in on the winning assets and buying more of the cheaper ones. Notice that I’m not using the word "losing assets". If you followed my advice and assembled a portfolio based on asset values (P/E, P/B), rather than on current price movements, so-called "performance" or "expert opinion", you will not own ETFs that force you to sell at a loss. I rebalance my IRA portfolio about 2 to 4 times a week. (See commissions above)
- For every 12-month period over the past four years, using these guidelines, I averaged 17% 12-month returns. S&P 500 (without dividends) averaged about half of that, during the same time period. It’s doable, and it does not take a rocket scientist, just a patient, consistent approach.