QUOTE (Rickson9 @ Dec 22 2009, 02:33 PM) I just wanted to point out that this was an incorrect generalization. I invest in stocks and I sleep well at night. I also don`t read the paper every day to see what happened to my money.
In my opinion both stocks and RE investing have different advantages and disadvantages. Since I have been modestly successful in investing in both asset classes, I have directly experienced the pros and cons of each on my portfolio.
To go through all the pros and cons of each asset class would be a tedius (and ultimately pointless) exercise so I won`t. "Invest in whatever asset class that you`re comfortable with" is probably a good rule to follow.
I agree with Jim`s point that both real estate and stocks (or better paper securities) are good investments and both belong in a diversified portfolio. I do disagree with Jim where it concerns economic forecasts - recognizing new economic trends is essential for an investor. For example, recognizing peak oil and the effects of BRIC countries on commodities, I invested big in oil and gas. I bought COS.UN for $18$ before the 5-way split (current costbase: $3 per share) and just the dividends have paid out the purchase costs several times over. I bought Senior Assisted housing in Calgary and they are my price real estate. I also bought recreational properties both condos and bare land - right the results are very mediocre but I am, just like the senior assisted housing banking on baby boomers and a seemingly ever expanding Alberta population. Because of heavy oil, I invested in a few Edmonton apartments and profited quite decently.
I invested in Brookfield (still do), Power Corp, Power Financial, Canadian Banks because of my optimism for Canada as a resource-powerhouse and the superior management quality of many of these companies - although Manulife was a disappointment.
Smartphones comprise now 10% or so of the wireless market, i.e. they are reaching a `tipping point` just prior to major market share growth (I hope). So I bought RIM at about half the price it was a short while ago. Same would be for Apple but I am a Bill Gates fan...
Because of my understanding of economic trends and stock market behaviour, I had the fortitude not to sell of in the last down turn. Instead I bought. Combined with real estate investments, I am nearly recovered in net worth compared with the peak in 2009 - not bad he? Just because I follow the economy and I am trying to guess what direction we`re going and what the new trends are.
Right now I am betting on a recovery in the U.S. and world economy. I bought Microsoft for $12-18 per share and a ridiculous P/E of 9, compare that to Apple`s P/E or that of Google. I bought J&J, GE and of course I have been buying gold from as low as $278 because I foresaw its return.
Yes forecasting scenarios not only help in risk management (see one of my previous posts in this stream), it also help me weight my diversified portfolio towards the winners. So, Jim, I quite fervently disagree with you about forecasting. You may claim that your success is prove that you are right, so then I must be even more right (hahaha).
An old geologist story, then I stop. To drill wells into oil and gas pools you need quite a bit of luck. Geologists tend to create or reconstruct a lot of models which they hope are right. But it is kind of like trying to hit the Bow river with a pebble thrown from a plane flying 5000 feet high on a cloudy day. Many geologists claim(ed) when hitting an oil pool that that proved their theories were right. Of course, the next hole drilled based on the same theory came in dry. It is about a combination of luck and skill (like playing cards) - not about having the perfectly correct model that one finds oil and gas. Same with investing, just because we are `successfull` does not mean we`re right and this includes myself.
