My Sunday Washington Post Business Section column is out. This morning, we look at the worst investing ideas of the year.

The print version had the full headline Where dumb money goes; the online version is the worst investing ideas this year.

Here’s an excerpt from the column:

“Here is the first half of my top 10 list of dumb investments ideas for 2014 (check back at year’s end for the rest):

Athlete IPOs. This year, San Francisco 49ers star tight end Vernon Davis IPO’d. Fantex Brokerage Services agreed to buy a 10 percent cut of all Davis’s future earnings for $4 million.

There are so many reasons this is a not a good investment idea, but let’s limit our discussion to three: 1) You have limited ability to pick which companies are going to do well; what makes you think you have any ability to guess what any athlete’s future income stream is going to be? 2) Even a minor injury can end an athlete’s career. In the NFL, the average career is short — either 3.2 years or almost 6 years. 3) Even if the 29-year-old Davis stays healthy, for investors to make money, he needs a giant new $33 million contract (according to the Fantex risk factors), plus he must “attract and retain endorsements, then generate other brand income post career.” Again, the thought of most investors getting this calculation correct is laughable..”


Check out the other bad ideas in the full article.


Worst Investing Ideas This Year.
Barry Ritholtz
Washington Post, July 6 2014

Category: Apprenticed Investor, Really, really bad calls

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3 Responses to “Worst Investment Ideas of 2014 (so far)”

  1. bsnceo says:

    The concept of using tax deferred investment products within accounts that already carry similar tax deferral features is widely criticized. There are many examples of when the criticism is warranted but it is a mistake to apply such broad strokes when making that criticism.

    • Liquidity Trader says:

      Can you give us some suggestions as to where putting a tax deferred holding into a tax deferred account makes any sense?

      • bsnceo says:

        Liquidity Trader, Investors who want guarantees have to get them from insurance companies that will package their retirement strategies inside a insurance product like an annuity. Annuities are subject to the same tax deferral rules as the retirement account. Might the fees limit the upside? Of course, but investors will often prefer certainty with the possibility of greater performance over the greatest return that ‘might’ happen without a guarantee (same also applies to guaranteed payments for life). Also, with interest rates so low, banks are essentially out of the retirement account business – insurance companies are filling the void. I’m not commenting on the quality or lack of quality of the offerings, but for some people, the tax deferred product inside an insurance product with the same tax treatment might be beneficial to their well-being. You and I might say something different about what might be more beneficial to our respective well-being.