Of course everyone is looking to next year to find out what the big thing will be to invest in. But it is also important to look backwards to learn some important lessons. Here are some of the best investments of this past year and it may give you insights into the one to come.
The big story of this year has been gold. It set record high prices over and over again. The standard answer to the reason for this was that it is a safe investment. It is even safer than the greenback, which this year has not been doing well.
There have been many questions of the rise of gold because it has very little intrinsic value. It has less industrial uses than silver. Even if you include jewelry, it shouldn’t be worth thousands of dollars an ounce for that. But it’s been in high value for thousands of years and I guess you can’t expect modernity to change that.
Small caps did well this year as well and may continue be good stocks to buy as the economy recovers. I think it was because many risk taking investors sensed that the worst was over, that the bottom price floors have been hit in the stock market and that the best way to position yourself for a recovering market would be small cap stocks.
High technology companies grew as well. Although these tech companies aren’t always the best investments, when an economy is recovering, people generally like these stocks. That is because when a recession hits, businesses lay off workers. When the economy starts to recover, companies retool with new technology instead of hiring people back. That means these tech companies tend to do well at the crest of a recovery.
The best investments of last year reflect a recovering economy. These investments may continue to rise, except for gold, as the economy recovers.
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