Greetings fellow fools, I am a long term lurker first time poster. I read the book “You have more than you think” several years ago. At the time I had quite a bit of debt do to some bad business decisions. In the next few months I will be debt free save for my house and want to start planning for retirement. I was really excited about the investment strategy suggested in the book about picking “Obviously Great Companies” and the Foolish Four. I understand that the Foolish Four has fallen into disfavor somewhat. Is the “obvious great companies” still a good place to start or is the general consensus to go in to an index fund? Many thanks for your advice and suggestions.
I've read most of the "old" Motley Fool books too. I find it a little suspicious too that they've discontinued some of the portfolios they used to trumpet -- the Foolish Four, Rule Makers, Rule Breakers (another book too). You will sometimes see embarrassed mention of these, but they were shut down years ago. Curiously, about the time TMF turned into a "pay" service. Now a lot of the income comes from marketing some of the premium newsletters or services, most of which are stock picking advisors. I can't comment on the quality of most of these. I tried the "Money Advisor" for a month and it's ok for a newbie. Still, a cynic like me might wonder how seriously to take an information source that purports to educate you about (say) Marriage and Money and doesn't have the terms "Divorce" or "Pre-nuptial agreement" in the lesson.Nevertheless, I still like TMF (mainly because I have a "free" subscription due to my voluminous postings). Most, if not all, of the "pay" services have a 30 day free trial. Try one out.Er, back to your original question (more or less). Probably the old advice in the books is still valid. The companies change over time (it's been 12 years, jeez) but the techniques should still be valid. You can do a lot worse than just putting all your (stock) money into an index fund or its more recent cousin, the ETF. There are a huge number of strategies to invest in stocks (or anything else probably); as Dad used to say "You pays your money and you takes your choice."
I would start with diversification, so an index fund is a good way to go. Generally, I'd suggest something like this for someone who is just starting to invest:Total Market Index Fund (cheap one, like Vanguard), or ETF.Then add to it:International Index Fund (or ETF) - start with developed markets, then add a little emerging markets). Small Stock FundREITsBond Fund (depending on how long it is until retirement)THEN, maybe, think about individual stocks, with small portion of your total portfolio.This is just me. It really depends on your risk tolerance, your time frame and your goals. But a total market index fund is a good place to start.Karen
I understand that the Foolish Four has fallen into disfavor somewhat. Is the “obvious great companies” still a good place to start or is the general consensus to go in to an index fund?I'm not sure there would be a concensus for indexing other than over on the index board. However, my vote is for indexing. The obvious plus for indexing is that the diversity is builtin to the investment. Within the subject of indexing, there are lots of choices. If you don't have a good understanding of asset classes(emerging markets, small caps, REITS, gold, oil, bonds, etc), then I'd suggest you get one of the various investing books that discusses them and spend some time deciding which classes you feel comfortable investing in. After making that decision, then search for the ETFs and/or Index Funds that are appropriate for those classes.Hedge
The Foolish 4 were a mechanical generated list.For Mechanical investing information check out:Foolish Workshop, where mechanial investing started @http://boards.fool.com/Messages.asp?mid=23838972&bid=100136AndMechanical Investing - the advanced site, fairly active @http://boards.fool.com/Messages.asp?mid=23866160&bid=100093This is probably to much information on non-emotional/statistical investing.
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