Come and Ride the Bubblecoaster: Riders at the Back Will Get Wettest! (Part 1 of 2)

Stories of investment 'booms and busts' abound. Sometimes they're called 'bubbles' and the word 'bust' is changed to 'burst' because......... that's what bubbles do. I use the words 'bust' and 'burst' interchangably. 

The word 'mania' can used instead of 'bubble'. They mean the same thing: the price of an asset (or asset class) gathers such upward momentum that people trade the asset for increasingly ridiculous prices relative to the how the asset was previously valued. The price is chased upwards until it reaches a peak and then plunges like a lead balloon.

At the peak of big bubbles, although humans are unaware, spacecraft are rumoured to have been spotted in the sky as alien news reporters are dispatched from outerspace to report on the bizarre behaviour of those involved in the bubble. ;-)

In part one, I would like to take a closer look at the common features of bubbles and, in part 2, I will see how human behaviour contributes, and is affected, by them.

Sometimes It's Hard to Stand By Your Plan: Why I Choose to Live in a Smaller Home Than I Can Afford.

We own our small home. During winter, it's warm and cosy but come summer, its seems stuffy and cramped.

For the moment, we choose to stay put although we could afford a significantly bigger and better place.

Are we making the right decision? You decide.

If Money Grew on Trees.......

we'd all ensure we got our 5-a-day!

Who Is the Best Person To Look After Your Money? I AM BEST

I like neat little tricks for helping me remember things. So I wanted to come up with something I could use to help me make decisions on my journey to achieving independence from my salary.

I considered the following questions:

• Who has the best understanding of my attitudes, aspirations and situation?
• Who cares most about the state of my finances?
• Who has the most to gain or lose from the state of my finances?
• Who will my finances be working for?

And finally, I considered this:

'Who is the best person to manage my financial affairs?'

My answer:

I AM BEST

Is the stock market 'just gambling'?

I've often heard the phrase, 'playing the stock market is just gambling', or versions thereof.

Is it true that buying shares on the stockmarket has similar monetary risks to activities such as a night at the bingo, visiting a bookie, a casino or playing online poker?

Considering that many of us have money invested in the stockmarket through personal investments, windfall shares and other financial instruments, direct and indirect, it would be incredibly disingenius if playing gambling games and investing in the stockmarket were in the same risk class.

There is much information widely available on the internet that shows that the stockmarket offers a better rate of return than other asset classes, never mind gambling, especially over extended periods of time. I'm not going to rehash the statistics here because they vary according to time period taken and are the results of a simulated model. If you want the numbers/ graphs, Google is your friend.

Taking the 10 year view is, for most people - me included, a bit too far into the future to be meaningful. I am therefore going to talk in terms of my experience as a private but reasonably confident investor who believes that, over time, the stockmarket will offer me the best rate of return I can get.

In this post, I am going to explore the case of buying shares on the stockmarket rather than short term trading, dealing in derivatives or shorting stock. Also when I say gambling games, I mean where a company is involved rather than an evening of beer and poker in your mate's back room.

First, lets see how Wikipedia defines gambling:

I love reading investment books......... but am disappointed today.

My bookshelves heave with stockmarket investment books and related subjects such as psychology. My collection is jokingly referred to as 'investoporn'.

When I first started reading, every chapter I read contained a revelation. Nowadays, I tend to get a handful of nuggets from each book I read. I'm happy with that because each book provides lots of revision, some different angles and a few brand new nuggets.

I'm always looking for something new to read and recently came across a book called Warren Buffett Invests Like A Girl by LouAnn Lofton . Ms Lofton, a member of the Motley Fool Team, is lucky enough to have her book heavily promoted by The Motley Fool.

I think The Motley Fool is an excellent website and is usually a great source of financial and investment information.

However, I do have some reservations about this book.

Apprentice - The 2011 Final.

The Lord's Prayer

Helen sure can crack a joke!

Should I pick her service - it's bespoke?

With a phone and yellow pages

Profits delayed for bloomin' ages.

Should I throw Jim a bone,

He who kissed the blarney stone?

Teaching money to the youth,

huddled in a computer booth.

AA - Apathethics Anonymous?

About eleven years ago, I signed on with the AA. I don't think I've had to call them out in the last 5 years but every May, as regular as clockwork, I get a letter telling me how much my new, increased premium is going to be. It was going to be £207 for this year.

Two hundred quid plus sounded a bit steep and breeching the £200 barrier seemed to jump start me into action.

I had a quick look on the AA website and also RAC and Green Flag.

The letter told me (twice) what a valued customer I was so I thought I'd see if that were true.

Since I'm much better at being assertive and masterful over the phone than in person, I decided to ring them up and see what was what.

After a few security questions and polite greetings, I gathered I was talking to an operative who I will call Mark, which isn't his real name but he was a very nice chap.