Re: Jim Cramer\'s nephew gives awful advice too
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This is pretty sound advice. I'm 23, work in finance, and know a number of people who basically do this.
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Elaborate on "work in finance".
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The reason to speculate is very simple: you are compensated for higher risk with higher returns. This is why on average, US bonds return worse than US stocks, and Emerging Market stocks do better than US stocks. If you are 20 and not planning on retiring until your 60s, then you can afford to handle volatility in your retirement portfolio. Your goal should thus be to maximize your returns, not to worry about risk adjusted returns.
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What you miss is that active trading of volatile stocks is not equal to buying emerging market index funds.
Following the article's advice you have a bunch of financially challenged, inexperienced investors aggressively trying to beat the market. How does this end well for the majority of them?
J
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