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Dumbest Investment Ideas of the Year (So Far)

June 27, 2014

Barry Ritholtz puts a call out to readers of his Big Picture blog for the dumbest investment ideas of 2014 — and some seize the chance to weigh in, both in earnest and fun.

“In my day job, I see lots and lots of really silly things,” writes Ritholtz, who runs Ritholtz Wealth Management in New York. “Portfolios transfer in filled to the brim with junk, silliness and evidence of malicious intent.” Now, he adds, “I am curious if any of you have seen anything that stood out as especially bad.”

For one commenter, shorting Treasuries ranks is the dumbest play of the year so far. That’s backed by another commenter. “At the beginning of the year” — with yields at about 3% — “97% of economists predicted yields on the 10-year to increase within six months,” this one writes. In fact, yields are now around 2.5%. A third reader agrees. “The worst advice of 2014 is the advice to sell your U.S. Treasury bonds because of inflation, the same advice given in 2013, 2012, 2011, 2010 and 2009. Advice which displayed complete and utter ignorance of the deflationary threat and disinflationary deleveraging of the post–Great Financial Crisis global economy.”

Or how about “ultra-long commodity ETFs”? — especially ones focused on precious metals. One Big Picture reader says they’re “great for one thing: offsetting capital gains.”

Another reader flags unit investment trusts. “I had a client come to me with some UITs from UBS,” this one writes. “They had about a 5% sales fee and came due every two years. The funds were then rolled into a new UIT with a new front load!”

Others warn against “flipping houses,” buying Franklin Mint “collectibles,” and viewing wine and other hobby-horse hoards — however much pleasure they may afford — as investments.

And then there’s the Big Picture reader who thinks the year’s worst investment to date is “watching CNBC.” But for full-on snark, that’s topped by a closet satirist who asserts “absolutely nothing is a dumb investment idea in America. Everything wins. Always up.”

By Thomas Coyle
  • To read the The Big Picture article cited in this story, click here.