In my day job, I see lots and lots of really silly things. Portfolios transfer in filled to the brim with junk, silliness and evidence of malicious intent.

I am working on my list of Dumbest Investment Ideas of the Year, but I am curious if any of you have seen anything that stood out as especially bad.

What say ye?

Category: Investing, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

28 Responses to “What Are the Dumbest Investment Ideas of 2014?”

  1. ch says:

    cash and bonds.

    I am down double digits in purchasing power terms of groceries, oil, housing, natural gas, pharmaceuticals, healthcare premiums and equities with my cash and bonds.

    • end game says:

      In 2014? Double digit inflation? Then you’re living in Inflationstan, a part of the country that no survey of prices has noticed — a land beyond measurement. For those of us who live in the known 50 states, inflation is running 2%.

  2. chartist says:

    This is an impossible task as it is all about time frames. But then again, you did say 2014. So, I guess shorting treasuries via the TBT would be the dumbest.

    ~~~

    Admin: I think the idea was not to identify trades that did not work out, but rather, ones that were dumb regardless of the outcome.

  3. jthomash2p says:

    Ultra Long 3x Commodity (Gold,Silver) ETFs has to take the cake. These are great for one thing: offsetting capital gains.

  4. Imspartacus says:

    I had a client come to me with some UIT’s from UBS. They had about a 5% sales fee and came due every two years. The funds were then rolled into a new UIT with a new front Load! 1%U 99%BS

  5. N says:

    At the beginning of the year 97% of economists predicted yields on the 10yr to increase within six months. At the beginning of the year the yield was 3%. Based on this advice, one would have bought TBT and shorted TLT or adopt another similar investment strategy. The yield reached a low of 2.44 since then and is currently around 2.5. Worst investment advice of the year so far.

  6. barbacoa666 says:

    Getting sucked into flipping houses. “Experts” are all over television and radio looking for people to implement their proprietary flipping scheme.

  7. cousinHub says:

    short Tesla ($TSLA) based on past performance only &/or some kind of valuation metric that was suppposed to mean-revert was certainly a bad idea! The stock is up another good 50%+ YTD.

  8. end game says:

    Agree with N. The worst advice of 2014 is the advice to sell your U.S. Treasury bonds because of inflation, the same advice given in 2013, 2012, 2011, 2010, and 2009. Advice which displayed complete and utter ignorance of the deflationary threat and disinflationary de-leveraging of the post GFC global economy. Advice to abandon the sole major component in portfolios with the lowest correlation to everything else, and with the most consistent upside in the event that known risks such as recession, deflation, sluggish growth, or a flight to safety materialized. Advice based on a misunderstanding of the critical role played by money velocity in causing inflation under circumstances of central bank easing and ZIRP.

  9. DrSandman says:

    Oh this is easy; I win: Investments in sports athletes.

    https://fantex.com/fantex-vernon-davis-215595

  10. BearPaws says:

    Absolutely nothing is a dumb investment idea in America. Everything wins. Always up.

  11. jwhjkh says:

    Buying non-traded REITS and BDCs for $10 that are actually worth $9 or so due to commissions.

    • freitagfan says:

      THIS. I’ve seen a decent amount of these private REITs lately. Large pass through of income but massive commission and they are locked into the investment. If you really look, a lot of times the planner is connected to the REIT somehow. Feels like the oil well LPs of the early 90′s.

      Ultra small mutual funds of around $20-50 million that the planner is partial owner of the investment management company or is the manager themselves. 3% management fees are the norm.

      1% management fee on the bond portion of a portfolio that is generating a little over 3% income.

      Friend of mine’s parents are paying 2% management fee for a planner to manage their investments. They are a preservation of capital type of client. The kids are freaking out.

  12. Alex says:

    Dr. Sandman wins, at least so far. That was amazing.

    The dumbest investment ideas in general are the most complicated ones with the highest fees. The dumbest ones in a given year are the new, trendy ones in that year. High front-end annuities and other things like that are timeless dumb ideas. They have nothing to do with 2014.

  13. theexpertisin says:

    Wasting one’s time watching CNBC.

  14. mpetrosian says:

    I’ve ACATed in several UITs this year that look pretty scary. There was only one, based on Sabrient systems bakers dozen that looked interesting. Short ETFs, EUO etc. GLD positions keep rolling in. I would usually say REITS, but I have to admit that a couple seem to be actually well run outfits, especially Griffin American. But dumbest must go to penny stocks. We get some crazy pink sheet toilet paper come across our desk. Too many tickers to list.

  15. Reversion says:

    A private REIT? Seriously? That’s either a failed attempt at thinly veiled promotion or you guys need to fire whoever is performing your real estate investment due diligence. I don’t know any truly smart money (single family offices, etc.) who would ever even consider deploying capital to a private REIT. Private real estate is a different matter altogether. I’m not sure how any advisor who adheres to a fiduciary standard could ever get past the fee summary in the prospectus, let alone advise a client to invest in one.

    ~~~
    Admin: LMGTFY
    Public Non-Listed, Private Real Estate Companies
    Private REITs Backfire on Investors

  16. Reversion says:

    Correction: a publicly-registered, non-traded REIT. Same alarm bells going off.

  17. peterg816 says:

    HSGFX. Hussman makes over 1% in fees to lose your money in just about every market condition. I’m just amazed how he still manages over 1 billion in this fund.

  18. ByteMe says:

    Taking your paycheck in BitCoin.

  19. b.remson says:

    Overfunding whole life insurance policy, “infinate banking”, “bank on yourself”. Had a prospect come in and show me a printed out excel sheet (no disclosures – straight up excel table) that had him overfunding the policy with his salary for SIX years. He could then immediately borrow his salary back from it while still earning policy dividends. The problem, he had no life insurance need and could be more aggressive than a 4.5% return. Insurance companies can project returns unlike any other industry. No regulation.

  20. boveri says:

    Dumbest investment idea from the start of 2014 to today was to invest in a bond fund that was not leveraged.

  21. mpetrosian says:

    Easy does it reversion. Put your wide brushes away.

    • Reversion says:

      mpetrosian – No offense intended and didn’t mean to imply that you aren’t serving your clients well. However, can you explain how you can get past the fee structure, appraisal/valuation and liquidity issues associated with non-traded REITS?

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