There are a lot of villains out there. Right here in Hazleton, we're still feeling the effects of the villainous operators of Municipal Energy Managers, who were contracted to maintain the city's streetlights but instead pocketed the money. The last time I checked in on the situation, there were nearly a dozen municipalities in eastern Pennsylvania who have either ended contracts with MEM or have filed suit against its owners. And of course, there was that to-do with Bernie Madoff, and legions of other schemers seeking to part fools from their money.
Kinda splashy, I know, throwing Zorg's evil face at you right off the bat. But Zorg's epiphany -- which came too late -- was that "if you want something done, do it yourself." There have been a few scandals recently involving hedge fund managers and ratings agencies, two entity classes which I view with the same scorn as the blattodea still sharing living space with me. First of all, hedging is something gamblers do. I hate gambling. Rule #3: Never leave anything to chance. Second, relying on someone else to tell you what to do with your money is just plain foolish. And giving someone else your money to manage for you is even dumber.
It can be argued that the US dollar is a legal fiction, that it doesn't really exist, that it's backed by nothing and therefore has no real value. Yet, as I write this, I'm eating ice cream I bought using US dollars I earned doing useful work for my employer (who I call simply The Company, because my opinions do not necessarily reflect theirs). So those dollars have some sort of value to me, The Company, the grocery store where I bought the ice cream, the ice cream manufacturer, and the dairy farmer. And all five of us want those dollars to go as far as possible to keep our operations afloat, and that sometimes means investing. Of course, each of us invests their money in a different way. The dairy farmer invests in feed, milking machinery, and veterinary care. The ice cream plant invests in machinery and sanitation supplies. The grocery store invests in freezers. The Company throws nearly all of its profits into growing its business (much to the chagrin of stock analysts -- muah-hahahahahah!). And I invest in tools and equipment to reduce my electrical dependency.
All this investing activity involves research. If you go into your local department store looking for a coffee maker, you might just grab the cheapest one. But I can guarantee you it won't last the year. A little bit of research will point you to a better coffee maker, one that will last five years and has a few extra features like a timer or an energy-saving mode or a built-in bean grinder. You'll pay a little more, and yes, your "research" may consist merely of reading the boxes of the various coffee makers on display, but you'll get something that will satisfy you so much more than just grabbing whatever junk you happen to come across first. I know for a fact that a lot of people take the same approaches to buying a car, ending up with a car for the next decade -- or the next six months. You can't just buy any random car. And you certainly won't give your money to someone and say, "Go get me a car." Who knows what you'll end up with?
The same goes for investing in stocks and bonds. You need to carefully research the company behind the stock you want to buy, and determine for yourself whether it is a good buy or not. Give your money to a fund manager, and God only knows what you'll end up owning -- or not owning. Many of you out there are confused by the intricate systems of investing, what with all the market quotes and analysts opinions and options and whatnot. But you can learn. A good place to start is The Motley Fool, who gave me my first leg up in investing parlance and procedure. And I suggest you do so, instead of letting the next Bernie Madoff get his hands on your hard-earned dollars.
Don't get blown up in the next fund scandal. Do your homework. Invest wisely. And put your dividends to good use.
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