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The Money Show: How to Lose Your Shirt on Trendy Investment Ideas

Recently, I was at the Money Show in Las Vegas. This is an annual gathering where thousands of "investors" come looking for the latest hot-hot-hot way to make money. I heard several pitches so hot you could fry an egg on them, such as:

  • Never be on the wrong side of the stock market again!
  • Always buy a stock that's going up!
  • Make seven percent a year like clockwork -- no risk involved!
  • Gold is definitely going to go up!
I was at the same show roughly two years ago, when stock prices had been rising steadily for five years. Unsurprisingly, things are now a bit different now than they were then. Hot topics at the time included international investments, REITS, and just about everything regarding the stock market.

These same relatively sober presenters are still represented today, just not as prevalent as I remembered. Now their talk turns to bonds, gold and market-timing systems.

Do I have a point? I actually have two:

  1. Financial markets are very unpredictable. Subjects that were stars of the show two years ago ended up not doing so well in the following years. What a shocker!
  2. While markets aren't predictable, people are. Investors want to hear success stories even though we know that "past performance is not indicative of future performance." We are absolutely Pavlovian in chasing this success, and then dumping what was successful when it no longer is. This buy high and sell low strategy has a lower chance of building wealth than my bets in the casino.
Now if the proven and "guaranteed" systems being presented actually worked, I suspect these companies would peddle them somewhere more gainful, such as to institutional investors. I'm sure those heavy hitters would pay dearly to avoid another meltdown like the one we all recently experienced.

Apparently, though, these advice peddlers have no interest in a spot on the Forbes list of the richest people in the world, and instead chose to market their brilliance to investors one at a time at various trade shows. Doesn't make that much sense when you think about it -- but for those of you who are believers, give me a call. Have I got some prime ocean front property in Nebraska for you.

My advice
There was some good stuff going on in Las Vegas, such as a presentation from uber-investor Gary Schilling, who actually had some pretty good predictions last year. (Which isn't to say he'll be right this year or next.) For the most part, however, when it comes to investing, remember the famous slogan: What happens in Vegas, stays in Vegas.

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