Comments on: Rule for Building Wealth: Don’t Chase Trends http://www.consumerismcommentary.com/2006/12/15/rule-for-building-wealth-dont-chase-trends/ A premiere personal finance blog, established 2003. Within, Flexo discusses his own experiences with money, and he and other authors comment on a wide range of personal finance topics. Sun, 08 Nov 2009 20:08:50 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: Matt http://www.consumerismcommentary.com/2006/12/15/rule-for-building-wealth-dont-chase-trends/#comment-74388 Matt Wed, 20 Dec 2006 10:38:23 +0000 http://www.consumerismcommentary.com/2006/12/15/rule-for-building-wealth-dont-chase-trends/#comment-74388 The only way to beat the S&P index is to buy things when they're underpriced relative to fair market value in a sane environment. By the time you can read about a "trend" in the newspaper, see it on TV, find references to it in blogs, or have any other access by purely public means, the assets supported by that trend will be, at best, priced fairly. By that point, the bargains are gone. To beat the average, you've got to find out what the NEXT trend will be. And of course, the only way to know that for sure is to be in posession of the kind of inside information you can go to prison for using in stock trades. So chances are that, at best, you'll be gambling on a guess. Way better odds than the lottery or even Vegas, but not what I'd call "investing". Which is not to say there's anything intrinsically wrong with it. But don't do it with money you can't afford to lose. The only way to beat the S&P index is to buy things when they’re underpriced relative to fair market value in a sane environment. By the time you can read about a “trend” in the newspaper, see it on TV, find references to it in blogs, or have any other access by purely public means, the assets supported by that trend will be, at best, priced fairly. By that point, the bargains are gone.

To beat the average, you’ve got to find out what the NEXT trend will be.

And of course, the only way to know that for sure is to be in posession of the kind of inside information you can go to prison for using in stock trades. So chances are that, at best, you’ll be gambling on a guess. Way better odds than the lottery or even Vegas, but not what I’d call “investing”.

Which is not to say there’s anything intrinsically wrong with it. But don’t do it with money you can’t afford to lose.

]]> By: Nagel http://www.consumerismcommentary.com/2006/12/15/rule-for-building-wealth-dont-chase-trends/#comment-73969 Nagel Sat, 16 Dec 2006 15:50:21 +0000 http://www.consumerismcommentary.com/2006/12/15/rule-for-building-wealth-dont-chase-trends/#comment-73969 I agree. Stay diversified and do not follow the "Herd." I agree. Stay diversified and do not follow the “Herd.”

]]> By: dimes http://www.consumerismcommentary.com/2006/12/15/rule-for-building-wealth-dont-chase-trends/#comment-73892 dimes Sat, 16 Dec 2006 03:13:33 +0000 http://www.consumerismcommentary.com/2006/12/15/rule-for-building-wealth-dont-chase-trends/#comment-73892 REITs are still doing pretty well. My husband has them and I wish he'd diversify, but he's not (geographically) in a position to do that right now. I hope they don't bust in the next six months. REITs are still doing pretty well. My husband has them and I wish he’d diversify, but he’s not (geographically) in a position to do that right now. I hope they don’t bust in the next six months.

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