Reido and arebelspy, you both make good points; Thus Insanity you should take their advice, don't listen to mine (so don't buy REM ok?)
However, here is an investing philosophical idea for both of you to think about just for fun.
Suppose you are investor who occasionally (not all the time but once and awhile) wants to make some money from your investments not just from the dividends but also from prices increases. To increase your chances of this happening, in general, you will have to buy your investments at a lower price than what you selling them for, right? That much is straightforward, I hope.
But now here is thing, think about when are investments at a lower price or close to its lowest price? When do they generally costs the least amount of money. The answer is of course when the investment is question has poor prospects or the general population has generally agreed there is something wrong with it. For example, it has a big defective or is generally understand to have poor future prospects. Thus, the public at large agrees that such an investment should decrease in price and thus costs less (its poor prospects are priced in).
Thus, if you want to buy low and sell high, you have to buy them when their prospects are poor and sell them when their future looks the brightest. Thus, in order to buy low you have to, in general, buy terds. Take for example, the DOW in the last five years. The Dow hit its low in 2008 or 2009 (my memory is not exact) and hit a level around 6500; what was happening when it was at this super cheap price? Hmm well lets see, the economic system of the entire US looked liked it was on the verge of collaspsing and that were heading for a long deep depression right. I think some major wallstreet banks collapsed; there was mass panic; What about the present now? The DOW is at 15000 because the US now looks like it has a brighter future than back in 2008, right?
So if you review the logic, in order to buy investments are very cheap prices, you have to buy them when they look like a dirty terds. Otherwise, if it is generally agreed upon that its prospects are bright, this is priced already in with a higher price.
Lets look at your logic as to why REM is a bad investment; First of all everything you say makes perfect sense, REM is doomed to fail, interest rates are going to kill it; You suggest that REM should only be brought when its future prospects are more favorable; however, this means by definition you will be buying REM at a higher price than me; in fact, if you use your logic to buy all your investments, you will always be buying them at high prices on average; thus, your logic is good and probably better than mine, but you may not be a very good buy-low sell-high type of investor, thus please stick to dollar cost averaging for your personal stash; this is only a friendly suggestion;
Now its true that REM could tank even lower than it is now and it probably will, however I admit that it is almost impossible to find an exact bottom for a given investment, we can only take a reasonable decent shot at guessing that right now, it is at its worst future prospects; we may be wrong but at least we will still be getting it at a decent price even its in not the absolutely cheapest price ever. Another caveat is that even if we buy REM cheap and it tanks another 10% we have to keep our cool and not sell in panic; Thus, this type of investing is not for the faint at heart.
Also keep in mind I only do this thinking for indices or ETFs that represent a large number of different funds. It does not work with individual stocks because if you buy an individual company when its prospects are bad, you risk losing all your money because it could go out of business. However, what are the chances of every single fund in this ETF going out of business? Or what are the chances of every company in the DOW going out of business together as a group. Not very high, right? Thus this is why I only think this way for indices and ETFs that represent a large number of different funds.
Hope your enjoy this theoretical argument for entertainment purposes.
