A Rich Life

The Old Ideas on Saving & Investing Don't Work -- Here's What Does

Podcast #103 — Cash on the Sidelines Often Disappears Into Nothingness

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I’ve posted Podcast #103 to the “RobCasts” section of the site. It’s called Cash on the Sidelines Often Disappears Into Nothingness.

“Experts” will often try to persuade you that stock prices are going up because there is so much cash waiting on the sidelines. The fact that prices have gone down does NOT mean that money has been taken out of stocks and is being stored for a time in money market accounts. When stocks are overvalued, prices can go down without the money going anywhere; it just goes “poof!”. This is one of the reasons why you need to be cautious investing in stocks at times of extreme overvaluation.

Comments

  2. Rob,

    You need to learn how to sell podcasts via computer downloads. Then you should bundle about 10 hours of special programs and sell the package at $10 or so per download.

    Have fun.

    John Walter Russell

  3. This is among your best.

    Thanks for saying that, John.

    I also like this one a lot. The greatest need today is for simple explanations of the ABCs of investing. Too much effort goes into the fancy stuff. When you get the ABCs wrong, you end up getting it all wrong.

    The sad reality is that even the “experts” are getting the basics wrong today. So I want to do whatever I can to help with that side of things.

    Rob

  4. you should bundle about 10 hours of special programs and sell the package at $10 or so per download.

    I am grateful for the thought, John.

    It is certainly my hope to make money from all this. Despite persistent indications to the contrary, this site is NOT a not-for-profit enterprise.

    My plan is not along the lines of the proposal you describe, however. My aim is to provide the most fantastic value proposition possible. It is my strong belief that the money side of things will to a large extent take care of itself if I do that.

    There’s only been one rub on the money side. The rub is that the interests of middle-class investors are today in conflict with the interests of investing “experts” who have advocated Passive Investing. We have seen that there are large numbers of people who want to learn about more realistic investing strategies. We have also seen that there are institutional forces that very, very much do not want word to get out about the failings of the now-dominant model that were first brought to light by Shiller’s research of the 1980s. Once the pressure to permit discussion of the realities becomes too great to hold back anymore, everything is groovy for everyone concerned (Passives, Rationals, Experts, Hobbit Reporters, everyone).

    The thing that I worry about the most is that the Passive Investing Dogmatists will take the entire economy over a cliff before they will break down and say the three magic words. I put the odds of that at about one in three. if that happens, this site fails. But then so do all the other sites, the Passive sites and the Rational sites both. Choosing an economic depression helps no one.

    I am grateful to you for listening to the podcasts and commenting on them. I learn from feedback and I am always happy when a fellow community member takes time out of his or her day to provide some.

    Rob