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So the markets got almost the best case scenario from the European elections. Centrist Macron won the first round and is predicted to win the second at this point, which would mean France remains status quo with regard to EU membership. If Le Pen had won the first round by a sizeable margin, we likely would have had a Brexit-like dip. If Melanchon and Le Pen had won the first round, we likely would’ve seen a free fall. I, for one, wanted the former as I’ve been waiting since November 2016 for some volatility to trade on. Eight years into the current market cycle, if I don’t get value, I will patiently sit out (because our portfolio follows a 50/50 momentum/value strategy and so by design, we don’t chase returns on the value part of the portfolio 

Now that you have learned about the basic types of investments (stocks, bonds, and alternative investments) and the benefits of investing in a diversified portfolio, let’s talk about how to get started investing your hard earned money.
 

Have you heard of Eike Batista? In 2012, according to Wikipedia, his net worth was an estimated $30 billion having made his fortune in Brazil from mining and energy. By 2014, Forbes estimated his net worth was a negative $1 billion after the collapse of his empire due to large debts and falling stock prices. Eike Batista’s wealth was concentrated in a few companies, he borrowed a lot of money, and he suffered the consequences. I wonder how he would have done if he had invested more broadly? 

You have $100,000. It is 1992 (think “Seinfeld” or Bill Clinton era) and you are trying to figure out where to invest your money. You are looking at buying either gold, a property, or oil contracts. Fast forward to 2016 and you need to sell your investment. One of these three investment options would have given you $1,272,000, but would have gone down in price by 56% at one point. Would you have bought it, and which investment was it? Read to find out. 

Stocks are the adventurous, high risk/high expected return roller coaster ride, whereas bonds are more akin to bumper cars, less risk/lower expected returns and a lot safer. As an investor, it will generally be prudent to have at least some stocks and bonds in your diversified portfolio (I will discuss more about this later in the series). In this post, I will discuss what a bond is, historical bond performance, and the risks entailed when investing in bonds. 

Investing can be daunting, exciting, and a very prudent way to manage your money. We all come from varied backgrounds when it comes to investing, some are mavens and others feel totally in the dark. I hope to illuminate your understanding of investing as I start this series called Investing 101 – Essential Knowledge About Investing. I aim to make financial “jargon” and complex concepts easy to grasp so that you feel comfortable and confident investing your money on your own or through a professional. 

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