Recent Blog Posts
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The Times' Rorshach Geithner Story
Apr 27 20099:04am EDT -
Sinking Animal Spirits
Apr 27 20098:04am EDT -
Counter-cyclical Urban Policy
Apr 26 200910:04am EDT -
Be Your Own Counterfeiter
Apr 26 20099:04am EDT -
Being Tim Geithner
Apr 25 200912:04pm EDT -
Notes From a Press Conference Naif
Apr 25 20099:04am EDT -
What Good is the News?
Apr 25 20098:04am EDT -
Stressful Enough
Apr 24 20092:04pm EDT -
Not Regretting the Pound
Apr 24 20091:04pm EDT -
Introducing the New Ford Squeeze
Apr 24 20099:04am EDT -
Non-Economic Questions of the Day
Apr 24 20099:04am EDT -
The Stress Test Blind Alley
Apr 24 20098:04am EDT -
Happy Hour
Apr 23 20099:04pm EDT -
Recovery Without Rebalancing
Apr 23 20096:04pm EDT -
The Shape of Your Recession
Apr 23 20095:04pm EDT
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Understanding Investments
Barry Ritholtz has words of advice for young and old:
1. Advice for Investors: Never buy anything you do not understand. This is a very simple rule, regularly ignored by all too many people. If you don't understand what a company does, DO NOT BUY IT. If an offering doc comes with a 157 page set of disclosures, unless you understand all the risks it contains, stay far far away.
The problem is that everything comes with a 157-page set of disclosures, these days. How fat was that Blackstone prospectus, again? Any stock, any bond, is likely to come with an enormous amount of documentation, most of which 99.9% of the investors in that security will never read. Index funds and mutual funds have fat disclosures too, but more to the point they also own lots of securities with even fatter disclosures of their own, so you obviously can't go there. Even opening a savings account, these days, involves signing various pages of small print which nobody reads.
So I have one question for Mr Ritholtz: Can you give a single example of an investment which the average American really understands, and therefore is qualified to buy?
