Greenspan -- On my side

Although I didn't start this PF blog until last year, my husband and I have been discussing investments for quite a few years. This all started back when we were newly married and living in Washington, D.C. All my co-workers invested heavily, and thus we were introduced to the concept of investing money (we were also introduced to the concept of having money period, but that's another story). We saved and saved, and I read a lot of investment brochures. An unexpected pregnancy stalled our plans, but I kept reading and learning terms.

As I have written here, this year we branched out. Not only did I start this blog and start tracking our triumphs -- and mistakes -- we even put a tentative toe into the swirling waters of stocks, via an IRA. We turned our guesthouse into a rental, discovered online savings accounts, even discussed the meaning of "equity fund."

My husband and I agree on most things, but we have a fundamental disagreement about Economics. Now, I think that my theory is the best, primarily because we usually make money on it. This is primarily because I actually invest the money, rather than thinking about investing it. This is the fundamental problem my parents have -- all talk, no money in the bank. Honestly, though, I wish he was investing his own way so we could compare. That is a future goal, I think, but for now, it's just me.

In essence, I am a psychological investor. I look at people's attitudes and try to guess what they'll do. For example, if a stock crashes, it gets my attention. If it splits, I find that a good time to buy -- people's attitudes are positive, more people are selling, etc. My husband disagrees. For him, it is math. Two stocks at $25 are the same as one at $50. Sure, that's true enough. But for me, money is an idea; math is just a convenient way to tabulate it.

What do you think, PF community? What strategies do you take when investing in stocks, and does it work? As for me, I was surprised to find that Alan Greenspan, the math genius and long-time Federal Reserve Chairman, says that stocks are based on the emotions of fear and euphoria. While I can't try to time my buying with fear and my selling with euphoria -- that really is a crap shoot -- I have to say that it sounds like Alan Greenspan is agreeing with my point of view.

Which, what with our terrible financial year, makes me feel a little euphoric myself.