what is the simplest thing i can do with my savings to get profit out of it that is greater than a savings account
can't i just buy a bunch of shares of companies that keep growing and succeeding? and leave the money there for a few yrs?
is it really as complicated as this thread makes it out to be
I'll try to address your points AND Pedros in one more post here by giving a little insight into my own investment style. This is NOT meant as definite investment advice, but some of my ideas I have in my retirement account may be good for you to ask your own financial advisor about - like if some of the funds I mention or other investments might be appropriate for your situation...
I invest mainly on macro and micro fundamentals. I change things in my portfolio when I see these things changing. Macro analysis could take forever to explain, but micro analysis is not quite as broad. I have a main investment account that is more aggressive, and a retirement account that is more moderate.
In my main account, I mainly look for value or growth or a combination when it comes to stocks and other investments. Value investments are often the more stable companies that have been around for a while that are currently underpriced. I tend to sell them off as they become less of a value and may get out of them completely if they become no longer a value or if there are other fundamental changes that make them no longer attractive to me for the time being. Low P/E with increasing EPS, along with low price / sales and price / book values tend to be good value characteristics. But there should also be other attractive characteristics - higher than average margins, return on equity, revenue and income growth, etc. And EPS should not be made artificially high because the company is doing things like buying back shares (reducing the amount of shares outstanding to make the earnings ratio appear more favorable).
As for growth companies, they can be quite volatile and may often (certainly not always) take some time to see the big gains. But sometimes they can really explode. Growth companies will typically have much higher than average revenue growth, and are often (not always) more small to mid cap, whereas most of my value picks tend to be larger cap. Lower than average PEG, and higher than average EPS growth and margin acceleration are also good things. High ROE and low p/s and p/b don't hurt either.
Strong cash flow and limited debt are also always an attractive quality in a stock.
Over a year ago, I was long over 200 stock and ADR holdings from around the globe in my investment account. I've trimmed that down to a couple dozen long stock positions and decreasing since Nov '12. Since then, I have been holding much more cash, more gold (SPDR ETF "GLD", at least 10% of portfolio), crude & a little silver, nat gas, and VIX in ETFs. And at times also smaller amounts of a few other metals and a bit of diversified agricultural exposure as well. Also 20% short the S&P 500 index via a Proshares ETF. I have made very good gains on my limited # of long stock holdings in the past year - far more than the broad markets. But I have also been down low double digits on the S&P 500 index short and on my commodities portfolio
I will also use options here and there in my main account - buying puts and calls to protect the downside or even to speculate a bit, and also perhaps selling covered calls on a less volatile stock I already own at a lower price that I don't think will move up anytime soon.
I mentioned this mutual fund in a previous post a week or so ago. He's fairly new to the game, so I haven't put a huge amount of $ in this yet. I have a little of this in my main account as well. To say he's done outstanding in the few years he's been around is an understatement. He's averaged 55% over the last 5 years, and was down less than 10% in '08 when the markets were down nearly 40%. This is just one way to kick the broad market's ass:
http://quotes.morningstar.com/fund/f?t=OSFDX®ion=USA I'm more long term "strategic" and somewhat more conservative in my retirement account. Mainly mutual funds, along with some cash (quite a bit right now) and commodity exposure. These are pretty much my "all weather" core holdings I tend to keep at least some of in my retirement account. These funds are very well managed, largely unrestrained, and tend to get pretty defensive when they see trouble ahead. The risk-adjusted returns on these have been outstanding, and all were down far less than the overall markets were in late '07 to early '09. The Dow and S&P 500 were both down 37-38% in '08, while most of these funds were down only single digits or low double digits. And they have killed the broad markets over time:
http://quotes.morningstar.com/fund/f?t=BRUFX®ion=USA http://quotes.morningstar.com/fund/f?t=SGIIX®ion=USA http://quotes.morningstar.com/fund/f?t=YAFFX®ion=USA http://quotes.morningstar.com/fund/f?t=MALOX®ion=USA http://quotes.morningstar.com/fund/f?t=FPACX®ion=USA http://quotes.morningstar.com/fund/f?t=PRPFX®ion=USA My 3 personal favorite bond funds I also have a little of in the retirement account . Notice the equity-like low double digit returns. I have very little exposure to bonds these days, however - mainly due to the interest rate environment.
http://quotes.morningstar.com/fund/f?t=FEHIX®ion=USA http://quotes.morningstar.com/fund/f?t=TGBAX®ion=USA http://quotes.morningstar.com/fund/f?t=TGEIX®ion=USA And this is good in a modest amount for some diversified energy exposure and some added alpha to the portfolio. Pretty volatile of course:
http://quotes.morningstar.com/fund/f?t=VGELX®ion=USA Ditto for a good way to get some diversified global real estate exposure without the liquidity, maintenance, tenant, etc issues and other problems that can arise in investing directly in real estate buys and sells:
http://quotes.morningstar.com/fund/f?t=PURZX®ion=USA I also like a little exposure to gold in this account as well. And when I'm more optimistic on a macro level, I'll also have a fair amount of small and mid cap fund exposure in my retirement account.