Why?

First of all, I think 2009 is going to bring horrors when more and more debt bombs explode.

But more importantly I’ve come to realize how foolish it is to invest in the public markets. What is an investment? Wikipedia says “Investment is the choice by the individual to risk his savings with the hope of gain.” I have a big problem with that definition. Notice the word hope? What are you doing hoping for a gain in an investment? I want to make an investment in only 2 scenarios:

1) I have an edge. I know something that almost no one else knows, and I can take advantage of it by investing.
2) I can directly influence the outcome of the investment by contributing knowledge or labor to it.

Can either of these conditions be met by a publicly traded stock? Very, very unlikely. Unless you have insider information and can get away with trading on it…but those opportunities come once in a lifetime if ever.

From here on out I will only be investing in local businesses or things that I can directly have a hand in (Internet startups).

Sure, there is more risk. But there is also more reward. No one was “supposed” to lose 30-40% in their safe and cozy mutual funds. But they did. Wouldn’t you rather have lost that money on a bar down the street that at least you could have had a few cocktails at before it failed?

I’ve learned my lesson losing money to the manipulated, fraudulent machinations of The Market.