Or so and so believes that oil will ... whatever by 2020.
News articles run reports on markets, commentaries, the whole load of them. The info business is a big market.
You see, we are all human, and uncertainty drives us nuts. We just need to know. It's in our nature.
Imagine, you go to a financial institution and they tell you, "I don't know."
Well, typically, a customer will just go to another bank/institution til one of them says, "Markets will go up, so you should invest in XYZ product with us."
We just want some certainty and anyone who is willing to be confident and give a prediction will get business, so these institutions just sell confidence and people will believe it.
But seriously, no one knows jackshit.
I worked in a big financial company previously. They made a lot of investments. Lots of highly intelligent people with all the right paper qualification and experience. So like everyone else, I always thought someone knows something. Someone just HAS to know something right? That's why there are hedgefund managers and CEOs and all those folks running multi million/billion dollar investment companies. So someone up there MUST know something that I don't know and IF I can get close enough into the inner circle, I can find out more about how markets will perform.
One day, I sat at a meeting. It was a large meeting with some of the big shots in the company. We're talking about the top guy and the country heads across the world. Like, head of US, China, Japan, Europe, Australia, these top guys run multi million/billion dollar portfolios. So the top guy asks, "Ok, so what do we do about our China portfolio. China seems a bit peakish so what do we do?" Then all the country heads give their presentation of data and numbers and "if this then this" and more data and pictures and pie charts. And then the top guy says, "But no one has given me the answer. So what do we do with our China portfolio?" Then the country heads go... show data, numbers pie chart, if this then this, etc... This goes around a few times and the top guy says again, "You guys still haven't indicated what we should do with our China portfolio."
This day made me very irritated and dejected. Basically, it told me, NO ONE knows ANYTHING. No big shot, no smartass, no country head. Really. Everyone is just estimating. If you think someone, some CEO knows something you don't, WRONG. They may have more information, but their guess is about as good as yours. And in any prediction, some guys will be right, some guys will be wrong. So if you think that if you get into the big boys club, you can get more information, don't bet on it. Markets are erratic and cannot be predicted. Things are changing everyday. Oil prices, interest rates, global economy, China economy, etc. Everything is uncertain. Anyone who can tell you anything with certainty is lying. And if it turns out that he is right, he's just lucky.
So in a world of uncertainty, what can a normal guy do?
There are a few simple ways to invest. I won't say which is better. To each his own.
1) Passive investing
Passive investing comes in different ways.
You can buy an index tracker/ETF, like S&P500 tracker, Dow Jones tracker, STI tracker, etc.
These trackers aim to follow the investments in the index itself so if the index moves up or down, the tracker moves in similar fashion. This gives good diversification across industries and sectors. Essentially it's like buying a large basket of companies and hoping the basket will do well. Historically, markets tend to move upwards.
Passive investing also can be buying some good stocks and holding them for years. Similar to the above, you can invest in a basket of stocks, but instead of following the index, you pick the stocks which you are interested in, or have a closer risk profile as yourself, or you may believe this sector will do better, or you like higher paying dividend stocks, etc.
In both the above, TIME is your friend. You aren't too concerned with how much you buy them for. You aren't timing the market. You can buy it for more expensive than average but as time passes, you are hoping that it will increase in price.
2) Value investing
Different from the above value investing is what Warren Buffet does. Many others also claim to be value investors but whether they can deliver is another question.
In value investing, you aim to buy something worth $1 by paying $0.50. Then you wait for the price to go to $1 and sell it. So you are looking for good deals.
Also you can look for companies which is worth $1 but you think it will go to $2, so you are willing to pay $0.90. Wait for it to go to $2 and sell it. Still looking for a good deal.
Note that there is a difference between value and price.
Value is what the company is worth and price is what people are willing to pay for the company at whatever point in time.
So when you look for a good deal, you buy when you get good value for the price you pay, and you sell when the price others pay is equal or more than the value the company is worth.
This is different from passive investing. You are looking for GOOD DEALS.
3) Bond investing
Providing loans is a "low risk" way to invest. This includes buying Singapore Savings Bonds. You get interest by lending money to countries and organizations. You can get between 1% to 8% or more returns depending on the credit rating of the company you are lending to.
You lose most of the money if the company goes bankrupt or experiences a credit event. Else, you probably won't lose money, cos if you hold til the end of the bond, you can get back your principle sum.
Unfortunately, there aren't many options to invest in the Singapore Bond market.
4) Whole Life Insurance
No. Really. Why not? If you don't like the stock market cos it's risky and you can't sleep when the prices move up and down, then buy a whole life policy. In the long run, it provides something close to 3% returns. It gives you insurance coverage upon death, terminal illness. So if anything unfortunate happens, your family will be well taken care of. You don't need to think about it very much.
You might want to diversify and buy multiple whole life policies from a few insurance providers though. Just in case one of them closes down 30-50 years down the line.
So yea. There are multiple ways to do investments. Most important is to know your risks and your own risk appetite. Even if you buy some financial product or structured product from some financial salesman, buy with the understanding that he doesn't know anything. So if you don't know what you're buying and the risks involved, understand that he doesn't know anything too. But that's fine. You may be lucky. And yea, if you read those articles on the news about the markets and why the stock market went down yesterday, etc, yea, those guys commenting and predicting, yea, they don't know anything too. But that's all cool. As long as you know they don't know anything, then you know the risks of listening to them. So you're still a well informed investor.