Back in the day, the only education needed for beginners investing was the phone number for Fidelity or Vanguard.
That was when the markets just went up.
In the 80s and 90s, you could basically just throw money into a mutual fund and enjoy reasonable profits every year.
Then the century turned and we got the decade of the 00s.
That decade had a pair of nasty downturns in the market and was overall down a few percent for the decade.
Depending on when you invested during the 00s, you could be up a little or down a lot or anywhere in between.
So what do you do now? Will buy and hold work like it did in the 90s? Of course nobody knows, but if you look around you find a world that is starkly different than the 90s.
In the US, unemployment is over 10%, but if you include underemployed and given-up-on-employment, the number is more like 18%.
Can the US economy do much with that much unemployment? Then there are bank closings every month, continuing foreclosures, looming commercial real estate issues, many trillions of national debt, and the list goes on.
Then there's Europe, with the PIGS (Portugal, Ireland, Greece, and Spain) with more national debt than can possibly be paid back.
Economies are all linked, so problems there will impact us here.
So what should those beginners investing in the market do? Let me outline 3 critical realities for surviving the new decade.
First, you need to abandon the blind buy-and-hold approach to investing.
There's a chance you won't lose money, but the odds do not favor another decade like the 90s.
And that's what it takes for buy-and-hold investors to prosper.
Second, you need to understand how to make money in a flat market.
There are tools for making a consistent monthly income in a flat market.
Stock options used to be reserved for the experts.
Fortunately, there are easy strategies that anyone can learn to profit when the market is going nowhere.
One of the easiest is selling covered calls against stock you already own.
Third, you need to know how to protect your assets from the next big downturn.
Again, there are easy-learned strategies to do this.
You don't have to grit your teeth and lose 40% the next time the market plummets.
You can buy insurance and come out even, or even better because of the downturn.
Individual put options, index puts, and bear ETFs are all great tools for smoothing out the market's roller coaster ride.
Unfortunately, most financial advisors tend to steer people away from options, declaring them too complex for beginners.
Yes, there are complex options strategies, but there are easy ones as well.
With a good understanding of these skills you can dramatically boost your investing performance.
Without knowledge of these simple strategies, you are likely to end the decade in the hole.