
Ask HN: Best books/source to learn about investing? - tialys
I'm a college student with well managed debt (I saved fairly well and have manged to keep my debts well within range for paying off within 2 years of graduating) and I'm considering taking some of my paycheck and investing it as opposed to saving it.  This includes both retirement funds as well as general stocks/bonds/etc...<p>I'm wondering what advice you have as well as what sources (I like books) you would recommend for learning about how investing works and how to invest intelegently.  I'm really looking to go for lower risk stuff, but I'd also like to do better than the just-under-1% my savings account gives me.<p>Thoughts?
======
jon_dahl
The first and best book on investing that you should read: A Random Walk Down
Wall Street ([http://www.amazon.com/Random-Walk-Down-Wall-
Street/dp/039306...](http://www.amazon.com/Random-Walk-Down-Wall-
Street/dp/0393062457)). This book has great investing advice; is funny,
interesting, and well-written; and clearly explains what's going on behind
different investment approaches. In other words, it doesn't just answer the
"what" question, it answers "why" and "how".

As for specific advice, investing isn't that difficult. The best approach is
to be lazy: decide on an asset allocation (e.g. 50% US stocks, 30%
international stocks, 20% bonds), buy index funds, and rebalance to these
percentages every now and then. Vanguard
(<https://personal.vanguard.com/us/home>) is probably the most respected
provider of index funds; give them a shot.

Check out David Swensen's lazy portfolio if you want something more advanced:
<http://www.npr.org/templates/story/story.php?storyId=6203264>.

For investing discussion, try <http://www.bogleheads.org/>.

~~~
keven
Index fund is the way to go for many people. In fact, it is the suggestion
William Sharpe gave to (pre-IPO) Google employees.

<http://www.sanfranmag.com/print/node/3368>

~~~
ovi256
Yeah, but be careful, most index funds have gone down recently, suffering
equity losses in the 10-15% range for the last year, before inflation. Just
take a look at the Vanguard funds [1], which have one of the best reputations
though. Of course, index funds simply followed the market downwards. Long
term, they're still a great, trouble-free investment.

I would also consider buying Berkshire Hathaway stock. Expensive, B-series at
about 4K, but worth it, again, long term. Slightly better returns too.

Even better, do not listen to me (IANA financier), but read Phill Greenspan's
excellent investing advice [2].

[1] <https://personal.vanguard.com/us/FundsIndexOnly> [2]
<http://philip.greenspun.com/materialism/money>

~~~
daveungerer
The fact that index funds have gone down recently should not cause you to be
careful. If you believe the long term value is still there, the best time to
buy is in fact after they've suffered losses.

------
nostrademons
#1 for me would be _The Intelligent Investor_ , by Benjamin Graham. Also read
all of Warren Buffett's Letters from the Chairman - they're all up on the
Berkshire Hathaway website. Peter Lynch's books are good too.

I see a lot of people here recommending _A Random Walk Down Wall Street_ ,
which is a good book, but you're going to finish it and say "This investing
stuff is too complicated for me. I think I'll just put my money in index
funds." Which is perfectly sensible investment advice, but if that's all you
want, I can tell you "Go invest in index funds" right now and save you a
couple hours of reading. ;-)

Jeremy Siegel's _Stocks for the Long Run_ is like Random Walk - it's decent,
but the conclusion is basically "go invest in a stock index fund and don't
worry about it". I'm not even sure that's great advice right now - he bases a
lot of his argument on historical performance, but when an asset class has
done well over the recent past, that usually means it'll do poorly in the near
future. Read neither or both - Random Walk gives you good perspective for
understanding Stocks for the Long Run.

Finally, if you do get into investing, make sure you start small. I've made
some wonderful investment decisions and some truly terrible ones. The
wonderful ones more than compensated, but they looked very similar at the
time, and if I'd put all my money into the terrible one there wouldn't be any
capital available for the wonderful one.

Actually, I'd recommend doing some dry-runs: _pretend_ that you're putting
money in a stock, and then track how well you'd have done over time if it were
real. Read all the 10-Ks for the stock (they're up in the EDGAR database at
the SEC's website), research all the fundamentals, and listen to the analyst
conference calls (Yahoo Finance webcasts them live whenever earnings come
out). That'll give you a sense of what questions to ask and what events affect
the stock price.

I did some of those dry runs and lost hypothetical money on a lot of them,
which makes me very glad that they're just dry runs. ;-)

~~~
comatose_kid
Dry runs aren't terribly useful, unless you're backtesting \- investing well
means dealing with fear and greed, and you can't simulate that. You need skin
in the game.

------
eposts
Here is a good list: <http://www.bogleheads.org/readbooks.htm>

General Investing

# The Four Pillars of Investing - by William ("Bill") Bernstein.

# Wise Investing Made Simple or The Only Guide to a Winning Investment
Strategy You'll Ever Need - by Larry Swedroe

# The Bogleheads' Guide to Investing - by Taylor Larimore, Mel Lindauer, and
Michael LeBoeuf

# All About Asset Allocation - by Rick Ferri

# The Informed Investor - by Frank Armstrong

# The Little Book of Common Sense Investing - by John "Jack" Bogle

# The Coffeehouse Investor - by Bill Schultheis.

Investor Behavior

# Why Smart People Make Big Money Mistakes And How To Correct Them - by Gary
Belsky and Thomas Gilovich

# Your Money and Your Brain: How the New Science of Neuroeconomics Can Help
Make You Rich - by Jason Zweig

# Rational Investing in Irrational Times: How to Avoid the Costly Mistakes
Even Smart People Make Today - by Larry Swedroe

Financial History

# Against the Gods and Capital Ideas - by Peter L. Bernstein

# Devil Take the Hindmost: A History of Financial Speculation - by Edward
Chancellor

# A Random Walk Down Wall Street - by Burton Malkiel

Like others here have mentioned, <http://www.bogleheads.org/> is a great forum
for Vanguard investors.

~~~
mechanical_fish
+1 for Bill Bernstein. An excellent book.

------
Anon84
Here are Warren Buffett's recommendations. I hear he knows a thing or two
about investing... ;)

[http://www.businesspundit.com/10-investing-books-
recommended...](http://www.businesspundit.com/10-investing-books-recommended-
by-warren-buffett/)

~~~
tialys
That's quite a list! Looks like good stuff though. Anyone actually read those?

~~~
Xichekolas
I've read _The Intelligent Investor_ and _The Theory of Investment Value_ and
_Common Stocks and Uncommon Profits_. All three were quite good.

To summarize the first two (very roughly): The market isn't perfect and there
are a lot of undervalued companies that are great. You have to find these
companies at a significant discount to what they are really worth, and then
you have to be patient enough for everyone else to realize their error.

The third would IMHO be more geared towards someone that wanted to be a
professional. Fisher talks extensively about ways to interview
management/competitors/clients for information not found on a balance sheet,
and prefers to look for new technology companies with huge potential upsides.
He admits himself that most of his success was due to a half dozen huge wins
in his entire life, and he tries to document how to find such wins.

Realize that with Buffet's reading list you are going to end up wanting to
invest like Buffet/Graham/Fisher, which means patience and a lot of due
diligence on what you buy.

If you don't have 100 hours a week to research/interview prospects, Buffet and
Graham would both recommend that you set a good allocation and buy index
funds. Fisher would probably tell you the same, as he makes it very clear that
he never buys a single stock without knowing the company like it was his own
(which often included knowing the management on a first name basis).

And remember, the key to allocation-based investing is rebalancing, so you
periodically lock in gains and don't get overly concentrated in one thing over
time.

------
SkyMarshal
Start here:

<http://www.bogleheads.org/> (long-term investing)

<http://www.tickerforum.org/cgi-ticker/akcs-www?post=5033> (day & macro
trading)

<http://wilmott.com/categories.cfm?catid=11> (quant finance & algorithmic
trading)

The single most important rule in investing or trading: don't lose money:

<http://infraredpress.com/>

<http://www.rule1investor.com/>

<http://safari.oreilly.com/9780132213080>

[http://market-ticker.denninger.net/2008/03/pump-pump-pump-
up...](http://market-ticker.denninger.net/2008/03/pump-pump-pump-up-
goldman.html)

Some additional sources:

<http://fooledbyrandomness.com/>

<http://finmath.com/>

Finally, 90% of finance books you can read at Borders or Barnes & Noble and
not need to buy and keep as a reference. Do that, rather than spend hundreds
on them, and buy only the ones you think you'll want to reread or keep on hand
for reference.

------
byrneseyeview
The best book on investing that I've ever read is this one:

[http://www.amazon.com/Buffett-American-Capitalist-Roger-
Lowe...](http://www.amazon.com/Buffett-American-Capitalist-Roger-
Lowenstein/dp/0385484917)

It's a biography, but there are lots of anecdotes about specific analyses.
Nobody can invest like Buffett, but just about everyone can benefit from
reading about how he did it.

~~~
aasarava
I'll second that recommendation. Lowe's biography of Buffett is an excellent
book -- it's a biography with lessons on investing woven in.

------
noodle
the internet does the job just fine, imo. there are some good investing blogs
that will give you good information for the beginner investor.

if you want my 5 second pitch for what you should do, here it is:

open up an online savings account with HSBC direct or ING direct, so you're
getting 3%+.

save up money so that you have padding for 3 to 6 months worth of living
expenses, in case of emergencies. i'd suggest 6 so that you have 3 months of
living and the other half is for monetary emergencies (big car problems, etc).

put your long term investment money (401k/roth) into index funds with low
costs. keys are diversification (50% domestic, 30% international, 20% bonds is
what i do) and long-term. despite short term drops, over the long haul, the
market will grow. set it and forget it.

after that, if you still have some cash left over, you can pick up some more
riskier stuff. just make sure that you fulfill your "safe" investments first.
ensure your long-term riches and safety first, then go for short-term stuff.

~~~
Tekhne
I agree with this advice for the most part. Nevertheless, I would insert
insurance (health, disability, auto, etc.) between emergency savings and long
term investing. Choose policies that are appropriate to your life needs, but
definitely do it. It's harder to do when you're living hand to mouth (e.g.
running a start-up), but it's a means of protecting your life, assets and
investments. I've had people close to me who had their net worth wiped out by
an accident. My $0.02.

~~~
noodle
oh, i didn't mention insurance because i don't consider it an investment, i
consider it manditory.

get insurance, even if its minimal disaster-level stuff. no question.

------
keven
Highly recommend Nassim Nicholas Taleb's Fooled by Randomness and The Black
Swan.

also <http://www.gladwell.com/2002/2002_04_29_a_blowingup.htm>

~~~
antiismist
It is a great book. But the investment advice can be summed up as: "Put $ in
T-Bills".

~~~
vitaminj
Either you didn't read the books, or I'm afraid you completely missed the
point.

His investment advice is to invest most of your money (say 80%) in T-bills,
and the rest in speculative investments (Taleb does it through derivatives).
The rationale is that most of your cash is protected (short of a government
default) albeit making modest returns. So you'll never spectacularly "blow
up"... but you also have the upside exposure to good "black swan" events in
your speculative investments.

~~~
antiismist
Well, I saw him give a talk in February at a Long Now Seminar, and I asked
him: "How should people invest if they aren't derivatives traders?"

And he said: "Don't invest."

I have read his books and I am familiar with his barbell strategy. Are you
really suggesting that he recommends the common man to invest in derivatives
and such?

~~~
jon_dahl
Very interesting - I've often wondered what the rest of us can learn from
Taleb's advice.

I've seen a slightly more watered down approach at use. Put 60-70% of your
money in government bonds (regular and inflation-indexed), and the other rest
in US small-cap value stocks, international small-cap value stocks, and
emerging market stocks. These sectors have been more volatile, but with higher
returns, over the last 80 years. Historically, this portfolio would perform
about as well as an 80/20 stock/bond split. And if the market drops 90%, you
still have 60%+ of your money safe.

I'm not convinced that this is the way to go, but it is interesting.

~~~
antiismist
I've thought a lot about it too. Investing in "extremistan" - the stock-ticker
price of a stock is dangerous. If you are a buyer and seller of stocks, then a
90% drop in the market is a disaster.

But if you are a buy-and-holder (i.e. a buyer of future cash flows), then a
90% drop in the market is a great thing - you can buy a lot more company that
before. Regardless of how the market moves, you will still be acquiring an
ever-growing % of whatever company you are looking at.

And you have dollar cost averaging working in your favor as well, so you are
guaranteed to do at least a little better than average.

------
breck
Invest all of it in my startup. :)

Now for real advice:

First, consider getting an online savings account from ING Direct(3%), or
putting your money into PayPal(2.5%)...Better than less than 1%.

Second, jon_dahl's advice is spot on. The 2 tricks are to diversify and to
dollar cost average(invest your money each month instead of dumping it into
the market all at once)....Index funds are the way to go. Vanguard's are
great...You might also want to read "Fooled by Randomness" which will make you
feel confident that this is the right investment approach, and anything else
is pretty much gambling.

------
simplyauser
I have read many of the recommend books. Here are my two pence.

Books on Wealth

    
    
        1. "Rich Dad Poor Dad"
         and find out exactly why someone becomes rich.
        (if you like this one, at some point you may also
         want to quickly scan through "Cashflow Quadrant
         Rich Dad's Guide to Financial Freedom".)
    
         2. Also "chapter 6 - How to make wealth"
         from "Hackers and Painters's chapter 6 - "
    
         3. "The Way to Wealth by Benjamin Franklin"
    
    

Investing books in this order

    
    
        1. Peter Lynch's One Up on wall street
        2. The Intelligent Investor  (Ben Graham)
        3. Common Stocks and Uncommon Profits
        4. Security Analysis (Ben Graham)
        5. The Warren Buffet Way is a famous business read not exceptional but read it if you have some time left
        6. A Random Walk Down Wall Street (Read it for a good laugh)
    
    

Do NOT read

    
    
        1. AA- The Motley Fool Money Guide
        2. How Gerge Soros Knows What He Knows
        3. Investing Online For Dummies
        4. Malkiel Burton - A Random Walk Down Wall Street
        5. Cracking the millionaire code
        6. Joel Greenblatt - You Can Be A Stock Market Genius

~~~
nickb
"Rich Dad, Poor Dad is one of the dumbest financial advice books I have ever
read. It contains many factual errors and numerous extremely unlikely accounts
of events that supposedly occurred.

Kiyosaki is a salesman and a motivational speaker. He has no financial
expertise and won’t disclose his supposed real estate or other investment
success.

Rich Dad, Poor Dad contains much wrong advice, much bad advice, some dangerous
advice, and virtually no good advice."

John T. Reed, Harvard MBA, successful real estate investor
<http://www.johntreed.com/Kiyosaki.html>

"However much money Kiyosaki did or didn't make in the past, he's making a
fortune by selling the idea that he holds the key to your financial future. In
one of the many logically creative passages late in the book, he raises the
astonishing idea that Americans don't spend enough time trying to emulate the
successful—there's just not enough hero worship out there. "It's one of the
most powerful ways we learn that we often lose as adults," he writes. "We lose
our heroes. We lose our naivete." If there's better proof of how wrong this is
than the success of Rich Dad, Poor Dad, I can't think of it."

<http://www.slate.com/?id=2067175>

~~~
zzzmarcus
There is _some_ good to Rich Dad. For example:

\- the explanation of how the rich earn passive income by acquiring assets
rather than making a direct trade of time for money. It may seem obvious if
you know it, but it's a basic and powerful concept.

\- he recommends learning to read balance sheets and becoming financially
literate which is, again, basic but important

\- his advice to consider the importance of taxes and learn to structure your
income to where you pay taxes but no more than you have to.

A lot of it's pretty obvious advice, but there is one thing he does well which
is to motivate people to take control and become interested in learning to
improve their financial situation. I think that generally outweighs the "bad"
and "dangerous" advice in the book.

There are better books out there, but I think that the (unfortunately named)
Rich Dad series takes more flak than it deserves.

~~~
nickb
Problem is that if you're a newbie, and these books are targetd at them, you
have no way of sorting out the wheat from the chaff. So the book as a whole is
simply not suitable for those that it was meant for.

~~~
zzzmarcus
Yeah... I don't know. I'm hesitant to come across as a big Kiyosaki advocate
(I'm really pretty indifferent) but while I was able to think of several
"wheat" examples, I can't really think of any chaff. Can you (or anyone) point
out some specific areas where his advice is dangerous or just wrong?

------
dionidium
_A Random Walk Down Wall Street_ by Burton Malkiel

It starts with a brief history of market bubbles, moves to an explanation of
the the most popular theories of stock forecasting (and why you probably can't
use them to beat the market), explains and argues (quite convincingly) for the
efficient market hypothesis, and concludes with lots of practical personal
investment advice.

------
utefan001
Like many of you, I have spent a lot of time trying to figure out what the
best investing approach is. My advice is to not spend any money on investing
books. I am not saying not to read them, just don't spend ANY money on them.

I think the future of investing is here, and it is covestor.com. This site
helps anyone stand on the shoulders of giants. Covestor shows who really knows
how to trade in a verified way. Some users on Covestor are professionals,
others are simply individual traders.

For me, I don't have the time to spare to try and beat the S&P. Thru Covestor
I have found a CFA/CFP that knows how to beat the S&P waaaay better than I do.
His name is Sean Hannon. In case you are wondering, Sean didn't pay me to
write this.

www.epicadvisorsllc.com

<http://www.covestor.com/rankings/popularity> (see #2 on list / user
"epicadv")

~~~
utefan001
I forgot to mention that I think a site like Covestor scares the big
investment advisor companies. If a CFA/CFP is extremely talented, beating the
S&P consistently, Covestor gives him/her a way to prove this. Why would I use
Goldman Sachs over a super lean / small investment advisory company when the
small company achieves better verified returns, has much lower fees, and
doesn't require that I have at least 100k+ to invest with?

------
tstegart
For savings, I use FNBO. They have an online presence (FNBO Direct), where
everything is done online. <https://www.fnbodirect.com> The nice part is, they
adjust your interest rate as it goes up and down. So when it goes up, you
don't need to look around for another bank, they automatically raise it for
you. Not all banks are so kind.

For books, try Bogle on Mutual Funds. In the end its a let down excitement
wise, because his main advice is basically "put it in an index fund and let it
sit for 40 years." He makes a good case that you'll do better than most people
this way. Of course, most people don't do this because they want the
excitement of trading, watching stocks, etc.

------
tjr
I really like Ben Stein & Phil DeMuth's "Yes You Can Get a Financial Life":

[http://www.amazon.com/Yes-You-Can-Financial-
Life/dp/14019112...](http://www.amazon.com/Yes-You-Can-Financial-
Life/dp/1401911250/)

Very conservative approach to long-term investing, but also helps prepare you
for other common life expenses, such as housing and children. A great broad,
bottom-line, why-this-really-matters-in-life approach to investing. I wish I
had read this book at or before graduating from college.

------
gcv
For the shortest introduction to sensible, index-based investing, read The
Coffeehouse Investor (Bill Schultheis). It shouldn't take more than an hour or
two to go through, and it contains all the basics. Then, if you're interested
in a more in-depth analysis of the same thing, read A Random Walk Down Wall
Street (Burton Malkiel), as suggested by several others in this thread.

------
ojbyrne
I really enjoyed Henry Blodgett's "The Wall Street Self-defense Manual: A
Consumer's Guide to Intelligent Investing" ([http://www.amazon.com/Wall-
Street-Self-defense-Manual-Intell...](http://www.amazon.com/Wall-Street-Self-
defense-Manual-Intelligent/dp/0977743322)).

It's basically a diatribe against active investing. Buy index funds and hold
them.

------
jkent
No one mentioned Dilbert's 9-point formula?

[http://www.marketwatch.com/News/Story/Story.aspx?guid=%7Bbe5...](http://www.marketwatch.com/News/Story/Story.aspx?guid=%7Bbe57f0aa-03d9-4320-bc4d-83363b6372f6%7D)

Won't paste it here, but it's worth a look. The first bit of advice is make a
will (yes, even if you aren't married - give it to the old hackers home).

------
zacharye
As an aside, my etrade savings account yields just north of 5% interest. Might
be worth looking into in the interim and even more so if you plan to trade
yourself. Is etrade a safe bank? Well, I've had money there for quite a while
and in this day and age what bank is safe?

------
Prrometheus
After you've read a few books that were recommended here, but before putting
down any real money, be sure to pick up a copy of Taleb's "Fooled By
Randomness" to make sure you have a healthy amount of skepticism.

------
syalam
bogleheads guide to investing

~~~
timae
I second Bogleheads. Also second the "Intelligent Investor," but that one
might be a little too much depth for what you're after.

------
jobeirne
Jonathan Hoenig's _Greed is Good_ is pretty excellent.
<http://www.capitalistpig.com/merchandise.html>

------
vaksel
Don't forget to pick up a book on how to read financial statements, once you
figure that out you'll actually be investing, instead of playing the lottery
based on hype.

------
josephl
Check out this site to learn a few tips on technical analysis:
<http://www.stockcaster.net/education>

------
maurycy
Market Wizards: Interviews with Top Traders by Jack D. Schwager Stock Market
Wizards: Interviews with America's Top Stock Traders by Jack D. Schwager

------
jakewolf
For all you who love playing with math check out Option Volatility & Pricing:
Advanced Trading Strategies and Techniques by Sheldon Natenberg

------
samt
Investments by Bodie, Kane and Marcus (BKM) is one classic that still has
value in this climate.

------
ca98am79
my favorites: <http://www.uglychart.com/?page_id=1534>

------
cypress-hill
try investing with imaginary money. the only way to learn about the market is
to be in it, even with imaginary investments. what was written about the
market in the past is based on the market of the past. its not all bad or
outdated, but a some of it is. for example, buy-and-hold only makes sense in a
secular bull. in a secular bear, you need to learn a new strategy.

learn by doing. simulate real investing. you will learn a lot.

------
ltbarcly
Random walk down Wall Street, then the Graham books (look for things that are
written by the people who taught Warren Buffet).

------
ideas101
you must read "The Dollar Crisis" before you invest in anything - trust me
this will help for the rest of your life !!!

~~~
lowkey
I completely agree. The conventional wisdom of buy and hold a diversified
portfolio of stocks and bonds or index funds is simply bad advise right now.

While stocks do tend to out-perform over the "long-term" there have been
multiple 10 year periods when stocks lost big in terms of real inflation
adjusted returns. (e.g. 1929-1960, 1971-1983, 2000-present)

As a primer on the current financial crisis, I recommend firing up your
favorite search engine and reading up on:

* inflation: understand that inflation is not rising prices, it is inflation of the money supply and debasement of the currency

* fraction-reserve banking and fiat currency (understand the leverage built into banks and financials and its impact on the broader economy)

* petrodollars and their importance to the US economy's ability to run deficits and import it's inflation as well as the rise of the Euro and the opening of Iran's oil bourse with it's promise to trade oil in all the world's currencies.

Other posts have listed some great resources, here are some general tips from
personal experience:

* Stick to the classics and understand fundamental valuation

* Remember, there is something to technical analysis for short-term trading and market timing, but most of it can be explained by thinking about the supply/demand situation for a specific stock or asset class. Don't get sucked into the voodoo.

* learn to think about stocks and asset classes in marketing terms (branding, awareness, interest, trends, etc.) and you will gain a big edge over most. If you can figure out where the money is flowing and why within market segments or individual stocks, you stand to outperform.

* invest in what you know. find companies you are interested in and learn their investment story. Read their ipo prospectus if it is a new issue or their last 2 annual reports if they are established.

* never accept a stock tip without an explanation of the investment thesis behind the stock. Do your own research and be able to explain why you hold specific positions.

I am an entrepreneur and as such am generally an optimist. However make no
mistake, there are clear and significant downside risks to this economy. There
is more downside risk than upside potential over the next 6-12 months and
possibly longer. The next 12 months will be an education in itself.

~~~
breck
I agree that the next 12 months will be an education in itself. I wasn't old
enough to remember the 91-92 recession so this will be my first. Things don't
look good.

But, I'm curious, why would you not recommend investing in stocks/bonds/funds,
even if the economy was going down? I mean, where else would you put your
money besides 3% savings accounts? Sure, if your investments return 5% and
inflation is 7% you are technically losing money, but it's better than the
full -7% you would earn if you stayed out of the market.

Maybe I have to read the book, but I'm curious what you have to say.

~~~
lowkey
Don't get me wrong, for a sophisticated investor this is an excellent time to
make money in the market. The thing is, I believe that many 'sophisticated
investors' who come along for the ride in a bull market are unprepared for
bear markets.

In bear markets the bias is down, up, and sideways at times - but mostly down.
Most investors do not participate on the downside and so are biased against
the trend.

There are exceptions though and there are more options available to individual
investors than ever before. One simple way to play both sides of the market is
synthetic ETF index funds such as those available through ProShares and
others. (no formal affiliation, but I do have ProShares funds in my portfolio)
With that disclaimer, here's a link: <http://www.proshares.com/funds>

These funds let you participate in either the short or long side of specific
market indices, market sectors, or geographic regions. In some cases they even
offer 2:1 leverage allowing you to say, gain 2% for every 1% drop in the DOW.
This sort of investment timing generally is not recommended for an average
investor. It is very risky stuff.

For the average investor, my advice is to buy gold (gld,xau), silver
(slv,slw), and other scarce commodities. Over the past 5 years alone, the US
dollar has already lost 65% of it's purchasing power as measured in gold
(<http://www.kitco.com/LFgif/au1825nyb.gif>)

