In another thread, “The idea that stocks always go up and that regular people should put their savings into stocks has likely created a phenomenon of irresponsible stock ownership (just look at those nonsensical private equity firms IPO) where the owners of the company, confident that their stocks will always go up in value, don’t bother exercising control of the company they own. This would certainly benefit the upper management who could get away with taking more money out of the company than they really deserve.” - Stranger
If stocks are not a good investment vehicle to put savings into, what is? Gold? Property? Commodities?
Stocks can be great investments. So can gold, real estate, commodities, derivatives, and many other investments. It depends on who you are, your temperament for market volatility, and the amount of time and effort that you’re willing to invest. It also depends on why you are investing, are you saving up to buy a new car or are you planning for retirement?
The keys are to thoroughly understand the particular investment, have a well-defined strategy for investing, and stick to your strategy. Don’t invest in stocks unless you are comfortable reading a balance sheet and income statement, are willing to follow the all of the news on the individual companies that you invest in, and listen to the earnings conference calls. Don’t invest in real estate unless you understand property management, real estate valuation techniques, and real estate law. You’ll have to really do your homework so that you always know more about your specific investments than just about anyone else.
Stocks don’t all go up or down at the same time, and gold bullion and gold mining stocks often move in opposite directions. Understanding economics is just a part of investing successfully.