I started investing in the stock market about 30 years ago. Let me give you a rundown of all the success I have had.

Opened a brokerage account and started investing with a broker.

He would call me to buy certain stocks that I initially assumed he had researched, but in reality they were only stocks that his company was recommending and I cannot guarantee the ulterior motive for these recommendations (my benefit or the brokerage house benefit). Anyway, all that would happen is that I made no money on the individual stocks and he made commissions by "churning", the act of just buying and selling stocks on a regular basis. In the final analysis, in spite of what a broker might tell you, he is more interested in his ability to make his mortgage payment than yours.

Purchased mutual funds

OK, so I got tired of watching my brokerage account go down instead of up which then lead me to invest in mutual funds. You know, just put your money in the fund and let professional managers handle the buying and selling of stocks. Well the problem with most, not all, mutual funds is that "yesterday's darling" is "tomorrow's disaster" and I at least found myself always chasing the next best mutual fund. Yes, to be honest, I did make some money but if you held the mutual fund too long it would eventually make you a disbeliever.

Now of course there is the school of thought that the best mutual funds are the index mutual funds that basically follow the path of the major indexes. Is there a problem with them? Look at their performance during the years 2000-2002.

The problem with mutual funds is that the mutual fund managers are under tremendous pressure to make money. Obviously if a certain fund is not performing well, what happens? People leave that fund in droves to go to another better performing fund. So at times the fund managers cannot see the "forest from the trees" and just keep buying stocks and not being in cash when they should be and ultimately during downturns they perform very poorly.

For a truly accurate perspective of just how bad mutual fund managers are click the following link. Business Week, September 25,2008

Invest via investment newsletters

There must be a gazillion financial newsletters and financial wizards out there. Unfortunately, I have yet to meet them. I subscribed to various newsletters and found the following problems.

Many of the financial gurus believe in diversification of your assets and I suppose there is some validity in that theory; the reality is it does nothing more than give you modest returns on your investments and for modest returns you do not need to be in the stock market where there are obviously inherent risks.