Suppose you created a Ponzi scheme that worked like this: For every dollar someone thought they were investing in your scam, you simply kept ten cents and put the rest in the bank, not invested in any way.

Every month you would generate a fake statement showing that your victims earned some healthy return, say 15%. You wouldn't need to worry about people withdrawing money because your fund would allegedly be the best around, at least according to your fake statements. And you'd still have 90 percent of the money sitting in the bank in case someone really needed some back.

This scheme would be highly illegal of course. It would also be one of the best investments anyone could have made over the past ten years, assuming few people withdrew any money. Most legitimate investment funds lost more than this hypothatical fund.

Almost everything I ever learned about investing turns out to be wrong. I learned that buying and holding a diversified portfolio of stocks was a sure winning strategy in the long run. So far, my lifetime stock investments are negative.

I learned that the safest investment is real estate, especially in California, because "they aren't making any more land." That theory hasn't worked out too well.

I learned that investing in California municipal bonds was extra safe because they were insured. That's great until the insurance companies themselves become insolvent.

So if everything that was good is now bad, is there any investment that we all assumed to be bad that is now good? (Other than stuffing cash under the mattress. Too obvious.)
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Mar 17, 2009
The best investment - invest in people. If you have enough money that you know there is more than enough to get by with then instead of risking the rest with mutual funds - where you are betting on strangers - invest in people you know - help them start a business or grow it.

Oh - but then you know that - having fun with that restaurant?
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Mar 17, 2009
Invest in education. Not that it was considered a bad investment before, but it's an even better investment now.
I am actively trying to start an education bubble: http://esl-sl.blogspot.com/2008/10/esl-sl-next-bubble.html
Mar 17, 2009
Allow me to add that all the investments i list require oversight and knowledge. You have to know what you're about. The days of cranking the handle of the marvelous money machine are over. They never existed in the first place. That was a series of bubbles, expanded by irrational exuberance, and a whole lot of hot air.
Mar 17, 2009
NPR'S Click and Clack, The Car Guys, have a Capital Depreciation Fund. Guaranteed 50% return on your money. You send them money and they send you half back, keep the rest.. It was supposed to be a joke but is doing better than most plans these days.

Seriously? Low end real estate, rent houses, micro-loans to blue sky start ups, and collectibles. Musical instruments , folk art and comic books seem to be OK, if not great. I actually only know about guitars. Electrics are down, but not crashing, acoustics, especially mandolins are holding steady.
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