What is an asset?

This question may seem obvious. Yet sometimes, the obvious is unseen.

Merriam-Webster® defines an “asset” as “an item of value owned”. This definition hardly helps.

If you defined “value” in the same dictionary you will find it defined as “relative worth, utility, or importance” or the monetary worth of something: marketable price”.

And if you define the verb “own” you will find that ownership is “control” over something.

Thus, an asset is an item with relative worth, whether monetary or not, that is controlled by an entity.

Sophisticated investors understand what the majority of the public does not.

What do they know?

Allow us to answer this question by answering the following:

What types of returns would you expect from a 30 year dollar cost averaging approach with a mutual …

Normally, I do not write about the market on a regular basis. Perhaps I should start because as the Dow dropped on Thursday several hundred points, I told my friend I thought they were just trading the Index. What I meant was volume had increased and price dropped but the action was done by speculators not long term investors, the true life blood the the overpriced Dow.

I have been reading a great deal about derivatives lately. Largely, my interest in this seemingly obscure financial realm was largely spurred on by listening to various “financial or investment experts” talk about derivatives and the danger they pose to the current economic system. For example, Warren Buffet, arguably the world greatest investor, referred to derivatives as “weapons of mass economic destruction”. My curiosity was piqued. The result is this elementary article on derivatives.

I can just hear all the Financial Planners out there telling their clients, “don’t worry, we’re in it for the long haul”. He means you are in it for the long haul and he is going to nibble at you a little at a time.

I am sorry for being such a cynic and I realize financial planners try to help people. Sometimes they actually succeed. But my point for this post is to dissect, in actual terms the flaws in the “buy and hold” strategy of Stock Market investing.

I was beginning to get nervous. The USD Index, the Dollar’s value against a basket of currencies, was hovering around strong support at the 80.00 level. Yesterday, the Index pierced this level to the downside, with the next support line drawn near 70.

The implications of such a move is obviously speculation, but amidst the sub-prime problems, growing trade deficit, rampant increase in the money supply, etc. (the list of risk factors obviously too large to list here), a move to around 70 could send inflationary ripples throughout the world. Today, the Index rallied a bit and I say, “Thank Goodness”.