money matters by sylvester clemente
F R O M T H E A N N A L S
of my father
Having grown up in a family of finance geeks, the tax if you cashed in some of your stocks that went “The pendulum swings too far in both direc-
‘universal truths’ discussed at our dinner table were way up, it does not make sense to own more than tions.” The same humans who created run-away
different from those of our neighbors. I’ll mention a 10% in any one company. I’ll say some names, tell me economies in the past, and the crummy one today
half dozen of them, hoping that at least one of them what comes to mind: Lehman Brothers, WorldCom, will drive market conditions in the future. It’s all about
strikes a harmonic chord. Enjoy! Pennsylvania Railroad, Enron, AIG, CitiGroup, Krispy greed and fear. It wasn’t long ago that people swore
“You make more with your ass than your head.” Kreme, Blockbuster... I could go on forever. You that tech stocks would never go down. Once the tech
Also known as “it’s time in the market, not timing the never know when a rogue individual in a finance bubble burst, the same people piled into flipping
market.” Stop trading your own account; you’re only department makes a big enough mistake to nearly homes…because San Diego real estate can’t lose
making TD Ameritrade, Fidelity or your stockbroker sink a good company with a single stroke of his pen. value. Now that greed is in check, fear has taken over.
rich (not that they don’t need it right about now). If By the way, every stock that I listed has dropped over People have stopped contributing to their 401K plans
you already hold a good portfolio of stocks, bonds 95% from their high. because the market is down, and they fear loosing
and cash, stick with it. Make sure that your invest- “Bulls and Bears survive, Pigs get slaughtered.” more. Invest an appropriate amount consistently,
ments are suitable for your needs and appropriate As well as, “Take a little, leave a little.” Don’t get so regardless of the economy, you’ll do fine.
for your risk tolerance. If you pile in when things greedy about buying at the low point, and selling at Finally, “Don’t forget the golden rule… He with
are going well, and panic sell when things are bad, the high point. Be thrilled to take a profit, and don’t the gold rules.” Please don’t put 100% of your mon-
you’re not holding a portfolio that makes sense for look back enviously if your stock goes up more. If you ey in the market; it leaves you without means to buy
you personally. There are a lot of good websites that had waited for CitiGroup to go from its high of $59 to something of value. Why limit your options? Leave
can suggest an appropriate asset allocation that’s $60, you would still be holding it, for under $3 a share! a little cash (not literally ‘gold’) in your portfolio, so
right for you. So… if you want to buy Apple at $90, then buy it at what if you are getting a low interest rate for a while.
“The only free lunch on Wall Street is diversifi- $90. Don’t lower your buy price to $85 when it gets Maybe a stock like Google will go public. Wouldn’t it
cation.” I do not care if you get a 25% discount on to $91. You will have a lifetime of investing, develop a be nice to have cash on hand to buy some?
your company’s stock, or that you would have to pay discipline and stay with it. Thanks dad.
72 RAGE monthly | MAY 2009
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