In 2005, I ran a series of diaries as a DailyKos Investment Club. I shared my thoughts about investing and invited responses and diaries from others to give their perspectives. Since then, of course, alot of people have seen their retirement savings decimated.
So why would progressives be interested in accumulating wealth? We're not in it just for the sport, or for the gambler's high. We want to live comfortable lives, but we also want to use our money to make a positive influence in the world, whether for our children's college education, by donating to charities, or through our support of progressive politics. Today just like four years ago, I see three prime directives to progressive investing:
A. Maximize the return on investment so you can use your money to improve the world
B. Reward those businesses with progressive policies toward their workers, their communities, and the environment
C. Support new technologies, such as alternative energy, which will make the world a better place in which to live.
So what now? Investing has been a really scary thing for the last 6 months or so, but we have a few things going for us:
- We don't know how close we are to the bottom of the stock market dive, but we know we are alot closer to it than we were a year ago.
- Our liberal brains are open to new ideas.
- The markets perform much better under Democratic presidents.
- We have progressive friends like bonddad and Jerome a Paris to help us make sense of everything.
For new investors, you don't need to be intimidated. Whether it's reassuring or frightening, the experts don't know much more than you. After all, 12 years ago only conspiracy theorists thought putting their money under their mattress would provide better returns than the markets, but the S&P 500 Index has dropped to levels not seen since 1996. A good place to start would be The Motley Fool. It has friendly advice for novices and a community of investors who put in their two cents.
As for my two cents, I don't think we're very close to the bottom. Nobody really knows where the bottom is, but I suspect that we'll need to see some economic indicators like change in GDP and unemployment getting less bad before people will stop freaking out. Whenever the bottom occurs, it will be a golden buying opportunity to try to recover our retirement accounts.
Consider my ideas for what you paid for them, and please don't blame me if I'm as wrong as the experts, but here are two of my investment ideas. Disclaimer: I have invested in these, but I am not institutionally connected to either.
Vanguard Ginnie Mae Bond Fund (VFIIX) This invests in government-backed mortgages. That sounds really scary, but being backed by the federal government means safety. It has had steady returns of around 5% the last few years, which is alot better than the infinitesimal interest you get from your bank. When the economy recovers, this might slowly drop in value as interest rates rise, but we've probably got a good year or two before we need to worry about that.
United States 12-month Oil Fund (USL) This is a relatively new ETF which invests in the oil market. It's not an oil company, but it actually buys options to purchase the actual black gooey stuff itself. If the price of oil goes up, this ETF does too. This investment may not be funding new and exciting technologies, but at least I'm doing my part to add a tiny bit to oil prices and reduce consumption. It remains to be seen exactly how efficient this ETF is at its stated goal of tracking the value of oil: it was formed because its sister fund USO has a nasty habit of destroying money every month. Oil is very volatile, so this is not a place to go for the faint of heart. I am one of those who think we have basically reached peak world oil production. That means increases in demand can't be matched by increasing supply, so the price goes up dramatically. Alot of analysts see much more upside potential than downside in the oil market, and the Motley Fool community gives it a big thumbs-up.
So what are your ideas? Do any of you know which tiny renewable energy company will be the Apple Computer of the 21st century?