Invest to Win in 2007

Because of inflation, which is probably three or four times higher than the government is reporting, and because of the falling dollar, you have to get a certain minimum return on your investment or you will actually be losing money. Money in any savings account is undoubtedly losing money right now. The common wisdom is that high risk means the possibility of high returns or the loss of your capital. This isn’t always true if you are able to define a clear trend.

Even the most experienced experts are not always successful in making money on the stock market and you should never listen to the experts on TV because they are likely pushing their own company’s stocks (as they did during the dot com boom). The place where you are likely to make the most money is somewhere that no one is talking about, not one is hyping, and no one thinks is a good investment.

This is called contrarian investing. Most people lose money in the stock market because they don’t invest until some stock is really hot. But it is at the point when a stock is really hot that it’s about to stop going up and begin to cool off. The time to invest in a stock is when it’s in the toilet, when it has hit rock bottom. That’s when it is about to start up again.

The trend I have been following for the past five or six years has been in commodities. Though you won’t hear it on TV or read about it much in the major newspapers or financial magazines, commodities have outpaced the S&P 500, the Dow, NASDAQ, and every other sector.

Thanks to a dear friend, I got interested in investing in gold. I didn’t know anything about investing. She subscribed to some newsletters and did her own research. I risked $3,000 at first. I followed her advice and began buying stocks in gold and precious metals. Some of these were high-risk “junior” companies, small companies with big potential. You could buy some stocks for less than a dime a share. Some of my stocks gained and some lost. I have had maybe three companies go out of business entirely. I have had companies bought out by other companies, usually to my benefit.

I added to my investments. I bought physical gold and silver coins. I have sold a number of stocks for high profits. By high, I mean 100% gains or higher. For most people in the stock market such gains are unheard of. Right now, I probably won’t sell a stock if it hasn’t gained at least 100%. In my portfolio currently I have two stocks with gains of over 100%, two over 200%, one over 300%, one over 400%, and one over 600%. My entire portfolio, which includes a number of stocks in the red, has gained over 100%. I have diversified and own energy stocks as well. My gold coins are up 41% and my silver coins are up 75%.

This is not because I have a lot of money nor is it because I’m a genius. It’s because there is a very powerful trend that has been going on for a number of years and it is probably going to continue for a decade or so. Because it is going to continue to go up for some years, there is still time to get on the bandwagon.

There are many ways to take advantage of this raging bull market that no one is talking about. You can pick individual stocks. I would recommend as a way to begin to get acquainted with precious metals. You can of course buy gold and silver coins from any coin dealer. Buying numismatic (old) coins is going to be costlier. You can just buy new gold American Eagles (or silver) or gold coins from other countries. Shop around. You can buy them on-line safely and for a reasonable premium above the spot price of gold. Exchange Traded Funds (ETF) are a way to buy into a focused investment through your broker. There are gold and silver ETFs that trade for slightly over the spot price of gold and go up and down with the price of gold and silver. There are energy related ETFs as well. You can buy funds of precious metals stocks. My retirement IRA is in a Fidelity precious metals fund. I don’t know that it’s the best precious metals fund, but it’s doing very well. It had the highest percentage gain last year of any of Fidelity’s funds.

Do your homework. Make some decisions. Risk what you can afford to risk. Sit back and watch. As a person who didn’t make much money for most of his life, it’s fun to watch my various investments. It becomes like Monopoly money after a while. I have lost $6-10,000 in a week (on paper) without jumping out the window. I have gained that much as well. Be optimistic. If you’re fearful, then you’d better stay with low-risk. Good luck!