As a mid-twenty-something who thinks he's pretty sensible overall with his cash, it's reassuring to see I'm not alone, but running with the current generation of financial wisdom.
[NB Not being snarky - I just remember the HN entry recently that mentioned the growth in off balance sheet financing.]
But you can keep an eye on "easy" things like cash flow. A company that can run on 100M of cash and produces 1B of cash per year is very unlikely going to go so under that it won't be able to pay its creditors, for example.
Aside from his advice ignore advice merely to diversify and hope. Diversify advice comes from old people still thinking in 10% return eras long ago. If you're getting 10% and have 20 diversified investments the failure of one is no big deal, even if you lost it all thats only a 5% loss and everything else returned a 10% gain for the year, so you really only lost 6 months. On the other hand, if you're getting 2% and have the same investments and one fails, then you've lost 5% and thats 2.5 years of growth where you'd have been better off putting the money in the mattress. And over that 2.5 years some other company will probably tank too leading to a cascading effect where "investing" your money at 2% or whatever is basically speculation/gambling you're better off picking up pennies from in front of steamrollers.
Now diversification does help with "return OF capital" its just no longer useful as a "return ON capital" technique. You lose one of your 20 investments you're wiped out for a quarter decade, but at least you haven't lost all your money... yet.
A relatively simple implementation of this has given me a 13.46% return over the past three years.
Side question: How long is one allowed to hold an ETF for?
As short or long as you want? You can algorithmically trade them in microseconds or buy and hold until you die and pass them to your heirs.
You can hold an ETF as long as you please, or as short as you please, they're traded exactly like stocks. The only caveat is that leveraged ETFs really are intra-day holdings only, because they can do very strange (and bad) things if you hold them long term.
The problem with low interest rates / low returns isn't so much a cherry picked three years from last trough to current near peak, but longer term. Look at the yield of the SP500 from 2000 to 2010 for a decade long perspective, for example. That's where losing a couple percent is a big deal.
And the point remains however, that "Diversification" isn't really something that can be accomplished with 10 stocks.
Bonds are, generally, less risky than stocks, but piling too much into bonds is not the safest way to go. Stocks can offset bonds risks.
Diversity, diversity, diversity.
Stocks now are totally over priced, and investing in bonds is not wise when the central Banks are printing money.
So the best thing you can do is use your money on yourself in a productive way.
I mean, plenty of people say that stocks are over- or under-priced. But study after study shows that their predictions, on average, fail to beat the market. Study after study shows that someone whose predictions or buys were better than average one year fail to beat the market the next year. Study after study shows that market timing does not work.
I'm not trying to be a jerk, but it always baffles me when highly intelligent, scientifically-minded people completely ignore the vast stores of evidence we've gathered about their likelihood of beating the market.
And this is of course how macroeconomics is designed to work: Inflation makes "green paper" unappealing, which stimulates investment in productive activity, which generates products and services, which compete for the greep paper, which curtails inflation.