I really feel awful about breaking my lifetime rule of never giving investment advice. I wrote a blog more than a year ago recommending a globally diversified ETF (exchange traded funds) index investment strategy.
Since last August (2007), this has been nonsense advice because all the markets of the world have moved in sync, as if they are just one market. They have all gone down. So there is no global diversity.
The math was simple. It is the Law of Large numbers.
If you take ten bags of pebbles from a pebble beach, the average of the
ten bags' pebble size will be nearly exactly the same as the average
size of the pebbles on the beach. The underlying assumption of the Law of Large numbers is that the variation from pebble to pebble is independent, they are not identical to start with.
Since August last year it is clear that neither the global markets nor the stocks listed on those markets are independent. They all move in sync. They are all connected to each other by some gigantic investment organism.
I have no idea at this time what the 'gigantic investment organism'
is. The consequence is that all stocks in the world are virtually one
stock.
There can be no mathematically rational investment strategy in this environment. Mea culpa. I apologize for my investment recommendation. Don't follow it because of me. Fortunately, those people who bought my portfolio at the time I recommended it (Dec. 2006-Jan-2007) have lost less than 3% as of today.