Quick Primer On Easy Money And Avoiding It


There is no reliable way to invest in an environment of easy money.  I’ve worked in a wide number of environments and studied many approaches that I don’t use, and I can tell you one thing: there is no approach that will give you easy money.

The easy money promoters make money off of subscription revenue.  They are not investing alongside you, as I do with my clients.  What I own, they own.  80%+ of my liquid assets are invested in my strategies, and most of the rest is in cash.  Our interests are aligned.  This is like not true of those that suggest easy money strategies.

When you see books suggesting that you can flip houses, avoid them.  Few make money off that regularly.  If that were true, someone would form a REIT to do it, and do it far better than you could.

Livermore Strategic Opportunities February 2021 Update

Clint CarlsonLivermore Strategic Opportunities, LP performance update for the month of February 2021. Q4 2020 hedge fund letters, conferences and more Many of you are witnessing first hand that our country, economy, (and now stock market) are all very fractured and becoming extremely challenged. Therefore, our hedge fund's theme remains focused on specific sectors and companies. Read More

The same applies to books offering a simple trading strategy.  If that worked, there would be a lot of stupid people losing money.  Wait, there are a lot of stupid people losing money, at least on a relative basis.  But that doesn’t mean that particular simple trading strategy works.

Wherever it appears the lure of “easy money” brings out the worst in people economically.  Love of money is a root of all evil. (1Tim 6:10)    Organically, value grows bit-by-bit, but often prices move in a more volatile fashion.  Try to win by buying stocks that grow value.  Winning from speculation is a crapshoot.  Avoid it, the odds are against you.

Imagine for a moment that we did not have financial markets.  Who would do the best?  Those that compounded their economic activities the best — those who were the most productive.  The same is true for us today. Focus on companies that are productive, growing organically.  That is almost always a good road to profits.

By David Merkel, CFA of alephblog

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David J. Merkel, CFA, FSA — 2010-present, I am working on setting up my own equity asset management shop, tentatively called Aleph Investments. It is possible that I might do a joint venture with someone else if we can do more together than separately. From 2008-2010, I was the Chief Economist and Director of Research of Finacorp Securities. I did a many things for Finacorp, mainly research and analysis on a wide variety of fixed income and equity securities, and trading strategies. Until 2007, I was a senior investment analyst at Hovde Capital, responsible for analysis and valuation of investment opportunities for the FIP funds, particularly of companies in the insurance industry. I also managed the internal profit sharing and charitable endowment monies of the firm. From 2003-2007, I was a leading commentator at the investment website RealMoney.com. Back in 2003, after several years of correspondence, James Cramer invited me to write for the site, and I wrote for RealMoney on equity and bond portfolio management, macroeconomics, derivatives, quantitative strategies, insurance issues, corporate governance, etc. My specialty is looking at the interlinkages in the markets in order to understand individual markets better. I no longer contribute to RealMoney; I scaled it back because my work duties have gotten larger, and I began this blog to develop a distinct voice with a wider distribution. After three-plus year of operation, I believe I have achieved that. Prior to joining Hovde in 2003, I managed corporate bonds for Dwight Asset Management. In 1998, I joined the Mount Washington Investment Group as the Mortgage Bond and Asset Liability manager after working with Provident Mutual, AIG and Pacific Standard Life. My background as a life actuary has given me a different perspective on investing. How do you earn money without taking undue risk? How do you convey ideas about investing while showing a proper level of uncertainty on the likelihood of success? How do the various markets fit together, telling us us a broader story than any single piece? These are the themes that I will deal with in this blog. I hold bachelor’s and master’s degrees from Johns Hopkins University. In my spare time, I take care of our eight children with my wonderful wife Ruth.

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