What should you do with your money now?

So many people have been asking me how they should invest their money that I have decided to set aside my usual response -- don't look at me, consult an expert, I once got a D in algebra -- and make a few general observations. I understand financial markets less than most investment advisors, but on the other hand I'm not in the business of trying to sell you something. I wouldn't invest in the stock market under any circumstances right now. Nothing is clearer after the Wall Street meltdown than that investment experts know much less than they thought they did. Guessing the direction of Wall Street is like guessing the direction of a mob. Who knows what street the people with torches will walk up next? I haven't forgotten that when the megabanks began to get in trouble, people sold shares of Hawaii banks that are in no trouble at all. You cannot rely on share prices being affected by rational thinking by other investors, and you cannot predict their irrational thinking. But if you insist on choosing a stock, go for companies in the health care business. People aren't getting any healthier. Or choose a company that owns a lot of land. Except for Hawaii County, they aren't make it any more. Currency markets are too volatile. Sure, there are trends. The Fed's decision this week to go to googolonullific interest rates -- I made the word up, but it means the lowest interest rates before zero -- ensures a weakening dollar. It has fallen 12% against the euro in two weeks and a third of that decline happened in a few hours after the Fed acted. The yen is strengthening against the dollar -- as I write this on Thursday morning, Dec. 18, it's trading for 89 to the dollar. Over the summer a Japanese visitor needed one third more money to have the same buying power in Waikiki. This rules out a bunch of other investments. Real estate strikes me as a good investment right now. Prices are lower than peak, and waiting for them fall a great deal more is a fool's game. A lot of people are refinancing mortgages at lower rates to reduce their monthly fixed costs, but for those with secure income another option is to build equity faster by getting a 15-year note instead of the usual 30-year mortgage. This will make it easier to trade up to a better place later on. I also think it's a good time to buy land in Hawaii, in areas that are likely to be more developed in 20 years. Puna district of the Big Island, for example. Land near future stations on the rail route will be worth a lot more one day. But suppose you're the classic "little guy," a working stiff with some confidence that you'll stay employed at decent wages through the recession. What should you do? Ironically, one thing that might be a good idea, within reason, would be to spend. For example, suppose you have an old car that will need replacement in the next two or three years. You can get a much better deal on a new car now, when car sales are terrible, than will be the case in two years if the recession is over then. The Hawaii Auto Dealers Association is openly predicting an improvement of car sales in 2010 because of pent-up demand. It might be smart to replace an old car sooner than that. This thinking could also apply to appliances and even certain reusable luxuries like flat screen TVs and additions to your DVD collection. I'm not talking about running up credit card debt, but if you can afford it now, it would be nice to have a year or two from now if you're facing higher fixed costs and spending less at that future time.