IF you are looking for that 7-10% a year, there's nothing wrong with adding a bit of Gold to your portfolio....it consistently has given me about 9% a year vs CAD for the past 8 years. I'm not saying put all in there, you can put other money at risk in investments, but having a 15% allocation in Gold, or perhaps other precious metals if you want to play them is not a bad thing. Gold use to be tricker to buy. Physical Gold you have to deal with holding or storing and delivering the asset. There are ETFs around Gold, some are leveraged but they are betting on things like the mining industry or just betting on the price of Gold vs USD. Can be volatile. Recently theres a new company called Goldmoney.com I started using them about a year ago. Kind of like an online bank account but in Gold. Let's you easily buy and sell Gold in any amount right from credit card or bank account. You are directly buying physical gold allocation and its automatically stored in a vault. You can buy and sell like an investment if you want to , or send it to someone else. Thought it was an interesting game changer for the industry as it eliminates all the hassle of physical ownership and all the risk of an ETF.
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I'm not saying that a small guy shouldn't manage his own investment, I just quoted buffet. I manage about half my portfolio, half is managed by pro managers. I have read numerous books on investing, and if you follow what buffett and graham preach and then look at what buffett has actually done in his career, there are contradictions and asterisks. The cliff's notes sum of what I have learned is that there are so many factors involved (finding excellent companies at discounted prices) in how much ROE you will get from buying a particular stock at a given time and selling at another given time, that at the end of the day for most people it makes more sense to put the most weight in low fee ETF's or get a financial manager. Nothing wrong with doing it completely by yourself, but you just need to be realistic about what that entails..
You ae correct, common sense is what this is really about
However if you buy a good company and hold it for 20 years, paying $10 per share vs $14 per share will have limited impact if it grows at or better than the market rate of return and pays you a growing dividend each and every quarter (for 20 years)
Again applying common sense and rational judgement should exclude paying 30 or 40 times earnings even after considering growth potential
if that is where your comfort level is best of luck
That however does not justify the original statement indicating the small guy should not manage his own investments
