For years investors have gone to financial professionals, done a risk assessment and developed an overall asset allocation.  This often looks like a pie chart of 40% US equities, 20% international equities, 25% bonds, 5% commodities, and 10% cash.  (Just an example).  This type of advice is based a series of official studies, mathematical correlations and conventional wisdom.  However, there are a few common sense issues with this advice including:
  • It has not worked well over the past decade or more.
  • The underlying assumptions about market volatility, correlations, transaction speed, transaction costs, self-service trading platforms, globalization, etc seem to all have changed.
  • It is provided by the same industry that has been a driving force behind the tech bubble, housing crash and credit crisis in the past years.  
  • It is not how any major investor (i.e. pension fund, hedge fund, endowment, or investment bank) manages their assets.

Information about investments has been developed and disseminated in the same basic way for a long time. Financial services firms provide the same basic advice for the average consumer through the same analysts and the same broker network. Yet, during the same period of time the average consumer has participated in the revolution in the creation and distribution of content of almost every other type of information. Over the same period consumers  have developed networks where
  • knowledgeable people build social networks via Facebook and Linked in
  • knowledgeable people share information on Wikiepdia and blogs
  • knowledgeable people sell to each other via Ebay, Craigs list, etc.
  • knowledgeable people book their own travel via Expedia, Travocity, etc.
Investment advice is likely to evolve in the same direction.  Conventional investment wisdom will evolve,  and the power of the crowd will be used to develop alternative ways to manage money.  It is likely to build on the combined knowledge and power of the investor class,  be facilitated by social networking, and use more sophisticated techniques.  It really is common sense that knowledgeable investors can pull together to share information and actions for mutual benefit of the community.

Common Cents Investing (CCI) hopes to be a contributor to this revolution.  

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 Why this  name?

COMMON - Perspectives from a common man on main street not Wall Street for the common man.

CENTS - Conservative, low-risk, ideas on how to make modest returns consistently. Not get rich quick, risky ideas.

INVESTING - Not day trading, not one-time set and forget , but actively managed equity investments using options and hedging to attempt to smooth out the ride.

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