MENU

Read this unbelievable story of how one smart investor lost money on every share he has ever bought

Now there’s a surprise…U.S. politicians, staring Financial Apocalypse in the face, have struck a deal to end the government shutdown and raise the debt ceiling.

Good old Uncle Sam can breathe easier again, as can our collective stock portfolios.

Overnight, the Dow soared over 200 points. Here in Australia, the S&P/ASX 200 jumped higher in morning trade, edging closer to its 2013 high.

Yes Fools. It’s a time for celebration.

But…

It could have been a WHOLE lot worse.

Fearing economic and financial disaster, under the sub-headline of “Plan to flood markets with cash”, the front page of The Australian Financial Review this morning screamed…

“RBA braces for crisis”

I do secretly admit I’d have liked to see the market’s reaction to a default. And I definitely like the prospect of a flood of cash.

It wouldn’t have quite been pink batts and school halls, but it does conjure images of $100 bills falling from the sky, sent to help needy Australians upgrade their clapped out three year old wide-screen TVs, poor souls.

Oh well… maybe next time, which is sooner than you think, seeing as U.S. politicians are set to only agree to fund government spending until January 15 2014 and suspend the debt limit until February 7 2014.

Only two months till the next crisis…

So less than two months before the shenanigans start all over again. I can’t wait…

The total irony of course is that, after all this angst and real pain for furloughed U.S. government employees, the Republican party achieved precisely zero of their demands, succeeding only in trashing their own political brand and kicking the can just two months down the road, from where there is NO other option but to keep kicking and kicking and kicking.

Yes folks, the U.S. is living above its means. It is spending more than it’s earning. But when you are still the world’s superpower, when you still have the world’s reserve “safe-haven” currency, you can get away with it, again and again and again…

I can make this sound REALLY scary…

It’s here I could scare you with stories of how it’s only a matter of time before the world loses trust in the U.S.’ ability to service its debts, and when that happens, the FINANCIAL APOCALYPSE that will descend on the global economy will make the GFC feel like the equivalent of losing 10 cents down the back of the couch.

But never fear, Foolish readers. If you can’t trust the Americans, who can you trust? The Europeans? The Chinese? The Swiss? Gold? Clive Palmer?

I rest my case.

Panic over, we can all move on.

And move on we need to do.

Where have all the dividend stocks gone?

I mean to say, WHAT THE HECK HAVE ALL YOU INVESTORS BEEN DOING THESE PAST FEW WEEKS?

Peter Wells in The Australian Financial Review notes that four of the 10 lowest volume days have come within the first 11 trading days of October.

What happened to those go-go days when investors were chasing yield, desperate to move their cash out of term deposits and into dividend-paying shares, thereby earning them a decent level of income?

All aboard the property bandwagon

Perhaps they’ve all jumped on the property bandwagon.

There’s nothing like a good old asset-class frenzy to get Aussie punters all excited about the apparent risk-free riches on offer.

It’s simple, hey? Plonk down a small deposit on a property, make sure you’re negatively geared (who doesn’t love a tax dodge?), rent it out to a nice young couple who could never afford to buy a house of their own, and sit back and wait for property prices to soar still further into the stratosphere.

What could possibly go wrong?

“I’ve lost money on every share I’ve ever bought”

On the weekend, The Australian Financial Review ran a feature titled “Property or shares: which is best for investors?”

The star of the article was prestige car seller Nick Theodossi, who amongst other things said…

“I’ve lost money on every share I’ve ever bought.”

That’s a very impressive feat, especially given the long-term trajectory of the stock market is UP.

I can only assume two things…

1) Mr Theodossi did NOT subscribe to Motley Fool Share Advisor.

2) He bought highly speculative mining stocks on some dodgy hot tip, and sold out at the first sign of panic.

Each to their own.

Property it is for Mr Theodossi, who gives this advice to budding property magnates…

…property investors need to be patient, buy in the best areas, look at the yield they get and then sit back and watch the capital grow.

Hmmm… that’s the same sort of advice I’d give to stock market investors.

Clearly, when it come to investing in shares, Mr Theodossi played by a different set of rules.

Like all get rich quick schemes, this one will also end in tears

I can only assume he treated the stock market as some get rich quick scheme.

Like all get rich quick schemes, including the lottery and extreme weight loss programs, despite the hype and the hope, they WILL end in tears.

I’m sticking with shares

I’ll stick with shares thank you very much.

Although I’ve had my losses — they are an inevitable part of investing — the gains have far outweighed the losses, and by some margin.

ASX trading volumes may be down, now.

Property may be hot, now.

But two things are certain…

1) Shares will be HOT again, perhaps starting today.

As reported in The Age today, the folks at Contango Microcap said…

We have already started to see funds move out of bonds into equities and we expect this trend will continue. This should support equity valuations across the globe, including in Australia, over the coming year.

2) Investors have very short memories.

Property gets the headlines, but it’s the stock market that is HOT in 2013

In the rush to the latest hot asset-class, property, investors have already forgotten the S&P/ASX 200 Index has jumped 13.5% this year to date, with popular stocks like National Australia Bank (ASX: NAB), Seek (ASX: SEK) and QBE Insurance (ASX: QBE) up 40%, 72% and 35% respectively in 2013.

Investment Advisor Scott Phillips (as seen regularly on Sky Business News) currently rates Seek as a hold.

But not so QBE Insurance. Scott named QBE Insurance as one of his ASX best buy now stocks back in January this year. As it turns out, it’s looking like a very good call.

It looks like a case of when you’re onto a good thing, stick to it.

The Australian Financial Review says “good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit.” Get 3 Stocks for the Great Dividend Boom in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

Bruce Jackson has no interest in any of the companies mentioned above.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.