What’s the difference between an investor and a gambler?  One has an expectation of a return.  This last year has many investors wondering if there really is a difference.

2008 was the worst year for the stock market since 1937.  The Dow was down nearly 34%, the S&P 38.5%.  The financial sector saw 50% of its value evaporate. 

If there is still anything worth saving for, where should you invest?  Here are a few ideas to consider:

Stocks.  If you’ve been sitting out this crazy market consider inching your way back in.  Last year there was overwhelming evidence the markets were headed for hard times, those who heeded the warnings were able to avoid serious losses.  2009 may continue the downward trend of this last year’s market; we could even see the opposite.  I believe incrementally buying into this market is the conservative investment strategy.  Investors are not gamblers, and Jumping back into the stock market right now would be the Las Vegas equivalent of putting all your chips on red.  Conversely, avoiding the market all together will rob us of probable gains.

Mutual funds are an easy and inexpensive way to invest, provided you don’t use a commission broker.  Savvy investors can also find blue chip stocks paying nearly 5% dividends right now.

Cash and short term debt:  I believe it’s important to keep some powder dry right now.  This crisis isn’t over and we may still be presented with some incredible investment opportunities in the not too distant future.  Savings and money market rates are not attractive right now, but for bargain hunters liquidity is vital.

Gold:  Gold has been up for 8 years running, yet technical analysts say gold is poised to move upward even further.  Because of deflationary concerns, our nation has the printing presses for the dollar running around the clock.  Our spinning monetary wheels will eventually get traction and when they do, watch out!  Consider a small position in Gold or Diamonds (with GIA certificate) as part of your portfolio to hedge against inflation. 

Investing isn’t gambling.  Gambling is a zero-sum game where a person only wins when an opponent loses.  Wise investing creates wealth for all parties involved. 

Disclosure