Bad investment ideas for 2010

On the heels of Morningstar.com's Ideas Week, a few counterpoints

John Rekenthaler 14 December, 2009 | 4:46PM
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I always did like the Grinch a lot better before those meddling Whoville residents swelled up his heart.

In tribute to that (ig)noble creature, I offer Bad Investment Ideas for 2010. Unlike all those sappy happy Best Investment Ideas pieces from my fellow Morningstar analysts that congest your inbox and befoul your spirits, this article delivers recommendations that would warm the Grinch's soul, if he had one. Ideas that, if implemented, would lead to wonderfully empty space under next year's Christmas trees.

Opening the Bad Investment Ideas menu are the highly leveraged exchange-traded funds--the funds that carry 100% leverage or greater. When it comes to causing misery, these funds are irreplaceable. Heads you lose, tails you might lose. Who could wish for more? These funds lose pots of money when the market moves against them, and they can also lose money when the market moves with them. Beautiful! Bull fund, bear fund, no matter what the animal fund, if you hold a highly leveraged ETF for a prolonged period, there's a high probability that you'll bleed red. The Grinch is giggling.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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John Rekenthaler

John Rekenthaler  is vice president of research for Morningstar.