Post of the Day
August 26, 1999

From our
Fribbles! Folder

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Re: The Motley Idiot

Author: FoolishGSS

[The following refers to The Motley Idiot Fribble from August 19]

While I can appreciate the angst experienced by the author of "The Motley Idiot" it would seem this individual has more to learn. Let's start with some good old fashioned common sense advice (which is pretty cheap these days).

1) There are undoubtedly better times to make investment decisions than when someone is not steadily employed.

2) It makes sense to at least consult with a full service broker (or other reputable financial individual) and get some form of professional guidance before leaping into the fray of the do-it-yourself crowd.

3) Any "Fool" knows that today's highest ranked mutual funds are not guaranteed to be sure winners.

4) Asset allocation theory (and theory is all it is)is only one of many things to consider prior to making investment decisions. In fact, there are many who are skeptical about the concept itself.

5)The market correction of last October and the corresponding 11% valuation loss was not a crisis to react to. History has repeatedly shown that these market movements are temporary in nature and that they are actually opportunities to increase holdings in quality companies at bargain prices.

6)US Steel and Timken Bearing (who?) may have low p/e's, but this hardly guarantees positive results going forward. If things were that easy, I would be richer than Bill Gates! The US Steel industry is cyclical in nature and has had problems on & off for years. And, unheard-of stocks are usually unheard of for a reason. It would seem a little education and some "Foolish" advice would've been most helpful for this individual to consider before making stock selections.

7)I own technology stocks (Cisco, Intel, Microsoft, AOL) and have done very well with them in the last 18 months. Were there times when I was more than 11% under water with these behemoths? You bet your bootie I was! But I had done the homework, and made my investments with a long term strategy in mind. It doesn't matter whether you are up or down on any given day, what matters is where you stand when you need the money. When the market tanked in October '98, I bought more of these stocks because I believed they were some of the best run firms on the planet and that they would come back someday. Little did I know they would all double or more less than 6 months later.

8) Don't try and time the market's ups & downs. Either buy or sell based on your fundamental beliefs and be ready to take advantage of extreme market conditions. Think long term (at least a year to five years or more).

9) Free advice can be worth nothing or it can be treasurable. That's why it's called advice.

10) Age has little to do with a person's investment style, unless it dictates a very short time frame. 50 years of age is not is not some magic number to base investment decisions on.

11) Of course the market goes up & down. How else can anyone make any money? P/e's are important but they alone don't tell the whole story. Why is Cisco worth a p/e of 80, when Pepsi is worth a p/e of 20? I'm sure we could think of many reasons pro or con.

12) Of course the rich get richer and the poor get poorer! It's been this way for all time, where have you been? The idea is to become one of the rich, or least move in that direction. It's a choice any investor needs to make.

13) Beating the S&P can be a worthy benchmark. But we all have to set our own goals, and we shouldn't become fixated on what the media says is the holy grail. A person's investment reward should roughly equal their appetite for risk. Whatever a person's tolerance dictates, is what makes sense to consider. Stay true to your nature at all times.

14) If Technology is too volatile for some, then they should stick to other types of investments. Different strokes for different folks and all that.

15) And finally, if someone doesn't have the cajones to be in a rather wild market then it would seem that they should park their assets somewhere else and just relax. Life is too short to go to sleep worrying every night.

Of course that's just my opinion...