TSP

I'm investing through so called mutual funds. They don't allow to invest directly in stocks, instead selling shares in portfolios of stocks. This portfolios are designed to have different levels of risk and corollary different levels of return to suit all kinds of investors. Some of this portfolios are centered on particular economy sector or particular part of global market or have particular investment strategy. The choise is really diverse. Such funds allow investors to save on brokerage commisions and enjoy market advantages of large institutional investors. While there are no gurantees of the return on investment there are strict rules in place for mutual fund managers as to what kind of operations they can perform with stocks, shielding investors from unscrupulous rip off masters. Hedge funds, as we understand it in US, are totally different beasts. They are the least regulated invetment companies which allows them to pursuit all kinds of investment schemes. They are very risky and are open only to rich investors. They are also highly profitable, sort of. It's state goverment that sold the lands and they do it for different reasons, some of them political. Auctions happen all the time, some years more land are sold than others. The case that I know about happened during 80s and the owner benefited from rapidly growing Florida economy and Disney World expansion.

I am investing a modest amount of savings in funds. I don't invest in stocks directly because don't have that much time to track situation on the markets. However I do follow business news and would like to think of myself as an educated customer of investment products. Regarding florida property market I know only one case where such astronomical returns materialized. It happened when goverment started auctioning off some of its lands. They broke it down into small lots ans sold only to individuals and to that in limited numbers. So if you were lucky to take part in that auction you could buy a lot for $500. In 10 years that same lot was selling for $15,000. Note however, that the price rose sharply only during last years. Throughout first several years it was same worthless and useless land. I wouldn't call this an investment it's more like a lottery. On the other hand florida real estate market in general was appreciating by 15-20% in last few years which is very decent level of returns.

I meant to write DJI but somehow typed DJW and what I was trying to say is that Stock Markets don't always reflect real economic condition. I don't know man, this is crazy world. I don't really expect big changes within 3 months, but will keep an eye on markets, just in case.

The diagramm illustrates my point. Even as chinese indices jump up and down, DJW remains steady. Chinese stock markets are notoriously opaque and loosely regulated which makes them unsuitable for use as an investment guide. This is not to say that Chinese economy and it's health doesn't have an effect on DJW, so when there are drastic changes, like tightening of credit policy, then it is taken very seriosly. Whether this measure is timely and enough to prevent recession of Chinese economy remains to be seen. I will stay bearish for near term.

Chinese stock exchanges, not only Shangai, were crashing several times in feb. None of it had serious consequences for world market. I think there were other factors at play when Dow fell on tue. I have nothing against buying cheap stocks but 1) it requires active trading position, you have only one day to take advantage of low prices 2) as a consequence of (1) that tactic will work with additional cash infusion. If you already have your cash tied in investment all you can do now is to wait and pray for recovery. I don't like energy sector for several reasons. If ever had to buy them as part of portfolio would limit their share to 10%. Taking into account recent downward trend of oil companies' stocks I would limit their share to 2% altogether.

I was on Dow for the last couple of months, luckily switched to EFA just a week ago. My take is if you are into the buy&hold better avoid hot markets.