How to Evaluate an Investment

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When you have won the game, it's time to stop playing that game. You should be taking lots of risks when you're young and less risks as you get older. Jay David Stein is a former money manager with decades of experience. He now devotes some of his time to helping do it yourself investors.

In this episode we discuss how NOT to choose investments and how to employ a good process to analyze an investment. We adopt the process of David Stein's 10 Questions To Master Successful Investing and apply it to PFF, an exchange-traded fund of preferred stock.

Links:

Investopedia Article -- "How Does Preferred Stock Work?": https://www.investopedia.com/articles/stocks/06/preferredstock.asp#:~:text=Preferreds%20are%20issued%20with%20a,of%20the%20preferred%20shares%20falls.

Ishares description of PFF: https://www.ishares.com/us/products/239826/ishares-us-preferred-stock-etf

Portfolio Visualizer's Asset Correlation Analyzer: https://www.portfoliovisualizer.com/asset-correlations

"Money for the Rest of Us: 10 Questions To Master Successful Investing": https://moneyfortherestofus.com/how-to-invest-book/

The 10 Questions To Ask When Considering An Investment:
1. What is it?
2. Is it an investment, a speculation, or a gamble?
3. What is the upside?
4. What is the downside?
5. Who is on the other side of the trade?
6. What is the investment vehicle?
7. What does it take to be successful?
8. Who is getting a cut?
9. How does it impact your portfolio?
10. Should you invest?