Quote:
Originally Posted by DonQuigleone
Rather then buying all these exotic mutual funds and whatnot, why not just buy stock in a relatively stable company, say, Coka Cola. Even if Coke's stock price takes a day to day tumble, it's not going to change the fact that at it's core Coke is a pretty profitable business, Coke isn't going to go out of business tomorrow.
There's a whole host of companies that are similiarly stable, you just have to make sure you're buying them at the right price. With market being what it is, I bet you could get stocks in those kind of companies for a steal.
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1) Mutual funds are not "exotic", they're very straight forward. For instance, one I use invests in socially responsible companies (ones that don't use slave labor, etc).
2) Investing in single companies.... here's a specific example: we invest in Walgreens, a retail pharmacy. Over the last few years it has dropped in value by half along with the rest of its sector and only started returning this summer before last week's tumbles. $45->$28->$35 ... depending on when you *need* the money, that could be damaging. The stock (like many others) has dropped 30% in seconds without any reason at all (high probability of stock manipulation?) Do you buy? Too late to sell... companies get punished even when they exceed their projections because a Goldman-Sachs analyst wasn't happy enough.
Plus, we have options with the company. Those have to be exercised before a given date. With the wild variation in the stock market, you could take a bath just because the date came at a bad moment - pure gambling. Recently, we've had to let options vaporize because the initiation value was higher than the current value... whee.
Even municipal bonds and utility bonds are unstable (historically a hugely safe bet and also tax exempt).
Savings accounts ~0.99% at best ($10000 or more)
CDs ... well if you're okay with the money locked up for 5 yrs ~2.2%
What I'm getting at is that unless you operate in values of a million $$ or better - you're probably getting raped every time you twitch.