Where’s my money?

Thursday, 6:15 AM — Okay, so the Senate passed the bailout package last night, and the House will likely be voting on it Friday morning.
 
You already know where I stand on this bailout bill — which I adamantly refuse to call a “rescue” bill — so I’m going to instead address a question I’ve been asked a lot lately:
 
Without a doubt, the numero uno question people email me about on here or ask me about in person, among those familiar with my penchant for following the market, is concerning where do I have my money.
 
I never tell.
 
Because, frankly, it’s a silly question — and a dangerous one.
 
For instance, say I told you I had 10 percent of my portfolio in Company “X.”
 
Does that mean I think you should run out and buy Company “X” also?
 
Nope.
 
I could have bought those shares a year ago at $20 a share — and they may now be trading at $30 on a slow descent from a peak of $45 in August.
 
I might have already been doing some cost-average and shaving profits on the way up and on the descent — and have already recouped all the money I put into the stock.
 
Therefore, I may have a stronger stomach to ride out the current shares through a more turbulent environment.
 
I also could have taken that initial stock investment that I shaved off Company “X” and stuck it into a safer MoneyMarket fund, where I’m receiving say a fixed six percent return.
 
Let me say it again — there are no shortcuts.
 
It’s dangerous to try to follow anyone into a stock — even Warren Buffet.
 
For instance, we’re all aware of Buffet’s recent buy into GE — but read the fine details of the deal.
 
It’s a very sweet one for Buffet — but I’m certainly not in any rush to run out and buy GE at the current market rate.
 
To be a good investor — you must constantly being doing due diligence — both before you buy a stock — and when you own it — as knowing when to sell is just as important as knowing when to buy.
 
If you just don’t have the mindset to do the constant obligatory due diligence — then the market is not a great place for you.
 
That’s not always a bad thing, as there are certainly many other alternatives out there with everything from good interest savings accounts, such as ING’s Orange account, to MoneyMarkets, to some good ETFs, to some solid mutual funds, to Treasuries and government-backed bonds, to a basic CD from your local bank.
 
However, if you really have your heart set on trading like Warren Buffet — you might be better off buying some of his Berkshire Hathaway — instead of constantly chasing his tail.
 
But, whatever you do, just remember not to base any of your investment decisions on anything you read here. Do your own due diligence — or at least enough research to hire the right professional to handle the investing for you.
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One Response

  1. I found your blog a couple of months ago, and find it must-reading now. I read what you have to say before I go to any other sites every morning. If you don’t feel it’s too personal, I’d like to ask if you are married? I am a single lawyer from NYC. Keep your thoughts and insights coming, Cathleen!

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