well, all this is very nice becasue it gives people a job... and it is useful to know all this stuff... but please dont stick to the theory because if you do you are sentenced to fail...
All advisors know all this, but not all of them get good results... even worse, the majority get bad results at the end of the year.. just move with the trends... when economy is going well, everyone makes money... We want somneone who can make money when nobody else can...
Asset allocation is important, yes!! bit stock picking its even more important!! To decide whether a person is too old to asume certain risks it is obvious... it will always depend how much money theinvestor has tho...
Focus on values... stocks that are undervalued... look for timing oportunities (Now its time to buy oil) maybe in 3 years it time to sell oil stocks... The only goal is NOT TO LOSE MONEY... its ok if you just make a 1% or 2%...
Thanks for your comment. I agree everyone should look for bargains when buying anything, but to 'look for timing oportunities" makes me think you are proposing to time the market? From what I've read here and elsewhere this leads to stress and loss of capital, if we make the factual assumption that the general curve of the stock market is up, historically about 8% a year for stocks then wasting any time 'timing' the market will make you hesitant to enter the market and cut your future earning potential. I think its much healthier financially and mentally to stick to a well diversified portfolio and dollar cost average what you are buying through a long term consistent buying approach.
I have to disagree with ecomic here. 1) your goal should be to use make much more than 1-2%/year over the next few decades. 5-7% real adjusted is a much more realistic and better target. I would never recommend 'bit stock picking' to a beginner. I also disagree that [asset allocation] depends on how much money the investor has. Except in rare cases your AA should be similar regardless of whether you have $5k to invest or $50k (the only thing that will change is which bucket you will use). I'd also advise caution whenever a stranger on the internet says "now is the time to buy XXX".
+1 to putting it $5500 into a ROTH. I recommend investing in a low cost, broad market index fund that you are comfortable with.
Thanks for the constructive response,
I just wanted to tint a bit my own words from that post.
When i say that making a 1-2% profit is good enough, i was refering to a specific investment (not the total output for the whole year). It is better to make a 2% in one year than losing a 1% we all agree on that.
About the timing, I was referring to be patient enough to wait for the right time to buy and sell. I have seen many people walking in the bank with some heritage they got and my colleagues offering them to buy whatever is hot at that time, lets say some fund, stock, bond, etc. These people just need to be lucky in order to make a profit, becasue maybe they are entering the market when it is hitting a resistance. The majority of "comercial" advisors are people who studied all that theory and apply it as it is written in the books. That is not good enough. I am my own financial advisor and (knock on wood) I have never lost a dollar from my own money.
(My opinions are just opinions and this is one of them) Keeping in mind the actual situation in the OIL sector, it is not a bad advise to say that the time to buy oil companies is coming to an end. To make real returns (above 10%) with oil companies it is now time to buy because OPEC won't be able to afford these prices much longer. Saudi Arabia has a 20% public deficit, Russia around 10% and Venezuela is about to collapse if things donīt change soon.