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Investment spectrum:
 1. starting a business
 2. buying a business
 3. buying shares in a business
 4. buying corporate bonds
 5. buying government bonds
 6. buying land

Investment strategy:
 1. If you're in the 1% of people who have the DNA for starting a
business, go all in on that and don't think about anything else.
If you fail, start another one.
 2. Otherwise, save 10% of your net monthly income.  Cache it in
a money market account until you have enough to make desired
trades with fees < 1% current value (this makes the average trade
about $1,000 for most people).
 3. Make an educated guess as to the likelihood of the stock
market outperforming US TIPS over the next ~ 5 years (or whatever
term TIPS look good at).  Invest that portion of your cache in
stocks and the rest in TIPS.
 4. Of the portion invested in stocks, index with roughly 50% and
cherry pick with the other 50%.  Sell stocks at most once a year.
Reinvest all dividends.  Many brokerages offer free DRIP -- make
sure you're enrolled!
 5. If your employer has a 401k with matching, contribute however
much it takes to get the maximum match, up to 5% gross pay.  If
they don't match or restrictions make it unlikely you'll get to
keep the matched funds, contribute 3%.  Subtract the percent you
contribute from 10 to get your new net pay monthly savings rate
(e.g. 10-3 = 7%).  Choose Roth 401k if available.  When you leave
the job, roll over to a Roth IRA at your brokerage.
 6. Always keep at least 5% of your gross annual income in your
money market account for emergencies.
 7. As soon as you determine you want to stay in one place for at
least four years, buy land and build a house on it.  Allow
yourself to cash out all non-IRA investments and forego up to
2 years of savings for the project.  Target 25% gross income for
regular payments.  If you can't get a construction loan or afford
rent while construction is ongoing, mortgage an existing house.
Make the interest portion of the first 4 years of payments no
greater than the cost of an equivalent rental.  If you have or
plan to have kids, buy less house in a location with excellent
public schools, as the marginal increase in house price and
property tax is always less than the cost of private school, and
the extra house price will usually be maintained until you sell
the property.
 8. If you retire or decide to draw income from your savings,
start with your TIPS coupons and dividends, then begin exchanging
stocks for triple-free municipal bonds.  Plan on no more than
4% per year on your principal.  Never withdraw principal.

Indexing suggestion:
 1. Put roughly 1/3 in a "small value" ETF like IJS.
 2. Put roughly 1/3 in a low-fee emerging market ETF like VWO.
 3. Put the remaining 1/3 in Berkshire Hathaway.

Questions to consider when cherry picking:
 1. Do you enjoy doing business with the company?
 2. Does the company have a competitive advantage in its market,
against existing and potential competitors?
 3. Does the market have potential for growth?
 4. Does the CEO understand the business?  If you met him on the
street and he asked you for a loan of the amount you plan to
invest, would you give it to him?
 5. Have annual sales ever dropped, and if so, can you explain
each decline to your satisfaction?
 6. Based on discounted cash flows, is the price reasonable?

Asset class performance:
http://bit.ly/fojFWu

S&P500 PE Ratio:
http://www.multpl.com

Good formula for automatic cherry picking:
http://en.wikipedia.org/wiki/Magic_Formula_Investing

Example DCF on TSLA:
>In 2009, Lexus sold 60,000 hybrid vehicles
> http://en.wikipedia.org/wiki/Lexus#Global_markets
>
>2009 was a bad year for cars and for Toyota especially, and
>anyway I consider it conservative to say that Telsa and/or
>Tesla-powered vehicle sales will exceed this in the next four
>years.
>
>At a price of $56,500 apiece, that's $3.4B at a P/S ratio of 1.
>Current market cap is $1.9B.  So, buy.
>
>Toyota margins are about 6.5% (luxury division's is much higher,
>but let's ignore this)
> http://bit.ly/i0LRWs
>With 93.2M TSLA shares outstanding, that's an EPS of $2.36,
>giving a DCF share price of $39 (assuming a 6% benchmark return)
> http://moneychimp.com/articles/valuation/dcf.htm
>Current price is $20.  So, buy.
>
>The Lexus IS (non-hybrid sedan) is about the same price as a
>Tesla S.  Current sales are also about 60K units/year.  So the S
>or its successor only has to be as popular four years from now
>as this single Lexus model is today for the TSLA valuation to be
>twice its current price.  (If Tesla see the sales growth needed
>for this, the stock will of course go up much more than 100%.)
>If you're like me and are only 75% confident this result will
>obtain, your valuation should still be 50% above current price.