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Author: joe6pack Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: investment stratagies Date: 2/6/1998 12:29 AM
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I am looking for an optimal strategy for investing $400 each month with the objective of long term capital appreciation. I am 43 and my wife is 35 and we have one child who will need to start college in 2007. We are modest wage earners, own a few stocks, have a little equity in our house and expect an inheritance of around 300K sometime within the next 15 years.
I am finding the management of my discout brokerage stock portfolio tedious, and feel a monthy contribution to a DRIP or no-load would more suit my lifestyle, but I somehow can't resist thinking the inheritance allows me to take on the additional risk trying of trying to hit an occasional "homerun".
Anybody got'ny ideas?

joe
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1653 of 76418
Subject: Re: investment stratagies Date: 2/6/1998 9:02 AM
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Greetings, Joe6pack, and welcome.

<<I am looking for an optimal strategy for investing $400 each month with the objective of long term capital appreciation. I am 43 and my wife is 35 and we have one child who will need to start college in 2007. We are modest wage earners, own a few stocks, have a little equity in our house and expect an inheritance of around 300K sometime within the next 15 years.
I am finding the management of my discout brokerage stock portfolio tedious, and feel a monthy contribution to a DRIP or no-load would more suit my lifestyle, but I somehow can't resist thinking the inheritance allows me to take on the additional risk trying of trying to hit an occasional "homerun".
Anybody got'ny ideas?>>

Listen….Do you hear it? That's the sound of Pixy slowly counting to ten - twice! You want an "optimal strategy for investing," but you find the management of your portfolio "tedious." Do you know how those statements appear to my funny little mind? It's like my saying I want epicurean delights for dinner nightly, but I don't want to leave my house to get them nor will I cook them myself. C'mon now! You and you alone are responsible for investing your money. And you and you alone will make the best manager of those funds. Unless you want to waste needless $$$ by hiring someone else to do this task for you, IMHO you need to change your way of thinking. You can "hit an occasional homerun," and you can make steady progress all by yourself. But only if you care about your finances and how you handle them.

Take the time now -- not later -- to be sure about what you want to do. To that end, IMHO you will be well-served if you toddle over to your local library, discount bookstore, or even here in the Fool Mart and pick up some easily read, easily understood, inexpensive texts that will soon have you confidently investing in stocks using some simple systems that will take but an hour per year of your time (if you're slow) yet produce returns that put the majority of professional money managers to shame. I suggest and commend the following to you: "Beating the Dow" by O'Higgins; "The Dividend Investor" by Petty and Knowles; "The Motley Fool Investment Guide" by the Gardner brothers; "One Up on Wall Street" by Lynch; and "What Works on Wall Street" by O'Shaughnessey. All are well worth their low cost and the small investment in time it takes to read them. Get them and read them. Be assured you will be glad you did.

After you've done that, take some more time to explore the various nooks and crannies of Fooldom. A lot is discussed here, and you can pick up some valuable information. Ask questions on those things that confuse you. Folks are great about providing an answer.

But we won't as a rule let you get away without doing SOME work yourself and taking SOME interest in what you're doing.

So ends Pixy's "Dutch Uncle" tirade.

Regards…..Pixy


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Author: dabob One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1656 of 76418
Subject: Re: investment stratagies Date: 2/6/1998 1:33 PM
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"I am finding the management of my discout brokerage stock portfolio tedious, and feel a monthy contribution to a DRIP or no-load would more suit my lifestyle, but I somehow can't resist thinking the inheritance allows me to take on the additional risk trying of trying to hit an occasional "homerun".
Anybody got'ny ideas?"

Mr. Pak:

I'll give you my .02 FWIW. Couple of years ago I decided that it was time to learn investing, because after all, ten years or so from now I will have sold my company, and maybe inherited some (we must have the same rich uncle) and I'll be sitting on piles of cash.

So to become skilled before I had all of these resources, I began investing. Now I'm much too impetuous to paper trade - this would of course mean that ALL MY PROFITS would be on paper, and that just won't do.

AND, I found all of these people that were talking on the Internet about GETTING RICH RIGHT AWAY with stock in companies that make Gallium Arsenide Diodes in Israel, and such things. Heck, the stock had already gone from .30 to $3.00 ! Jeez, if I had only done this 9 months ago I'd have a ten bagger! I couldn't type fast enough to borrow 4 grand from my kids college fund and BUY IN DAMMIT!

And that was so much fun that, with all my new found on-line friends, I bought several more cool companies that do things like make xrays of engine blocks. Heck, when a stock is only sixty cents, you CAN OWN A BUNDLE!

Then I found out why they are called Penny Stocks. After my purchase $3.50/shr purchase eased on down to seven cents, well you start getting the idea.

But hey, nothing ventured nothing gained. I had bought Microsoft at (split adjusted) $45, so I'm not totally stupid (however I almost sold my MSFT to buy the penny stock, and had I done so I would be typing to you from GraveNet). Just got in with a bad crowd, and bought some stupid stuff. Not my neighbor's fault that his high tech company's stock went from $52 to 3, but it is too bad that I bought some at $19.

I'm in the software industry, buy what you know! Oracle is the best damn database in the business. It's off its 52 week high by 20%, earnings are coming out soon and some guys on-line say it's gonna be good. Proud new owner of Oracle at $35. Wow, what is it going to be next year when I sell it to build my pool?

Can you say $18? That's what it was 5 weeks later.

It was about then that I picked up TMFIG.

You want to own individual stocks and hit a home run? You better go to batting practice. That means doing the research. Which means taking the time.

Otherwise, you might as well try to hit a Nolan Ryan fast ball.

TMFIG has several strategies that lead to long term wealth creation without much time and effort (at least historically). Forget the home run. Unless you want to buy some of my Israeli Semiconductor stock, which is available at a sale price this week only.

To Pixy's list of recommended reading, let me add one: The Millionaire Next Door. That's how Joe6Pak gets rich. Good luck.

Bob.

PS: The on-line folks I mentioned were NOT fools at fool.com, whom I have found to be very realistic, measured and helpful.

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Author: Respectable Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1658 of 76418
Subject: Re: investment stratagies Date: 2/6/1998 1:40 PM
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"I am looking for an optimal strategy for investing $400 each month with the objective of long term
capital appreciation. I am 43 and my wife is 35 and we have one child who will need to start
college in 2007. We are modest wage earners, own a few stocks, have a little equity in our house
and expect an inheritance of around 300K sometime within the next 15 years.
I am finding the management of my discout brokerage stock portfolio tedious, and feel a monthy
contribution to a DRIP or no-load would more suit my lifestyle, but I somehow can't resist thinking
the inheritance allows me to take on the additional risk trying of trying to hit an occasional
"homerun".
Anybody got'ny ideas?"

I know Pixy already gave you a little speech on being responsible for your finances, so I'm sorry to sound like someone else giving you a lecture (people really don't lecture at others on the boards much, so I'm sorry if this is your indoctrination), BUT I do feel someone must warn you about counting a possible future inheritence into your retirement equation. My father suggested to me that he would be leaving me $300K when he died and to not bother saving for my son's college education or retirement, but I don't think it prudent to rely on someone's dying and leaving you money to finance important life events. It's like counting your chickens before they hatch. For one, people are living longer than ever, and who's to say that even if they stay healthy (not need medical care that can eat into their estate, especially if they don't have insurance to guard against this) that they won't spend most or all of the money before they die (my father is traveling all over the world and has been for the past 12 years since he retired, so I wonder how much of his estate is even left)? For two, even if there is money left for you when the person dies, it could be too late to finance what you are needing to do (send a kid to college, or even retire, as if you inherit $300K a few years before you want to retire, it won't have much time to earn compound interest and probably won't be enough to retire on, especially considering inflation). I would leave inheritance out of your equation, except perhaps for thinking of things you would like, but don't feel are truly needed (like a mansion or expensive car).
With that said, I know the Motley Fools recommend a S & P 500 Index Fund (like Vangaurd) for those who don't really like to watch their portfolio. I'm not sure how they feel about Payden and Rygel's Growth and Income Fund, but it is something I am considering plunking my $2K into this month. This fund hasthe method of having half its money trying to mimic the S&P 500 and the other half invested in the dogs of the Dow (another method the Fools seem to favor, though not as much as the well known Dow 5 method or their Dow 4 approach). It's a no load fund, but the expenses seem a tad high considering there is so little to do in managing this fund. If anyone happens to be reading this that has comments on the fund, I'd love to hear/read them. Whatever you do, good luck in your investing!


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Author: Respectable Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1659 of 76418
Subject: Re: investment stratagies Date: 2/6/1998 5:33 PM
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I agree with Bob's book suggestion of The Millionaire Next Door. It's a very fast read and you will never look at people quite the same way after reading it. Yesterday, a friend of mine commented on someone else having just bought a new Lexus and said, "They must be doing pretty well." I suggested she read the book. Sure, some people who have tons of liquid money also drive fancy cars, but they appear to be more of the exception than the rule. Ditto the owners of mansions. Another friend of mine told me she checks out the shoes men wear to gauge how much money they have. Being that I felt this such a shallow thing to do, I didn't even bother telling her how foolish (little f) a thing that is to do. Perhaps I should let her know, since she is a friend, huh?

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1662 of 76418
Subject: Re: investment stratagies Date: 2/6/1998 6:13 PM
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Dabob,

<<You want to own individual stocks and hit a home run? You better go to batting practice. That means doing the research. Which means taking the time. Otherwise, you might as well try to hit a Nolan Ryan fast ball.>>

Well said!

Regards…..Pixy






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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1664 of 76418
Subject: Re: investment stratagies Date: 2/6/1998 6:16 PM
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Respectable,

<<I know Pixy already gave you a little speech on being responsible for your finances, so I'm sorry to sound like someone else giving you a lecture (people really don't lecture at others on the boards much, so I'm sorry if this is your indoctrination), >>

O.k., I admit it. I was kinda preachy. Just attribute that to my desire to get folks to take responsibility for their own financial lives instead of leaving that task to others. My evangelism got the better of me for a moment.

<<With that said, I know the Motley Fools recommend a S & P 500 Index Fund (like Vangaurd) for those who don't really like to watch their portfolio. I'm not sure how they feel about Payden and Rygel's Growth and Income Fund, but it is something I am considering plunking my $2K into this month. This fund hasthe method of having half its money trying to mimic the S&P 500 and the other half invested in the dogs of the Dow (another method the Fools seem to favor, though not as much as the well known Dow 5 method or their Dow 4 approach). It's a no load fund, but the expenses seem a tad high considering there is so little to do in managing this fund. If anyone happens to be reading this that has comments on the fund, I'd love to hear/read them. >>

The fund doesn't have a long enough track record for me to comment pro or con. However, I do know it will never beat the do-it-yourself approach. First, too much money has to be held as cash for possible redemptions. Second, there are the expenses you mentioned. Thus, to me, it's just another fund.

Regards…..Pixy






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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1665 of 76418
Subject: Re: investment stratagies Date: 2/6/1998 6:25 PM
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Respectable,

<<I agree with Bob's book suggestion of The Millionaire Next Door. It's a very fast read and you will never look at people quite the same way after reading it.>>

Also well said. My job takes me on the road across the country to some of the smallest towns in the nation. I am constantly aware of the hidden riches and hidden financial saavy in the least likeliest people and places, I haven't been able to judge a book by its cover in over ten years now.

BTW, you should tell your friend your observations. It may save her from future embarassment.

Regards.....Pixy

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Author: rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1668 of 76418
Subject: Re: investment stratagies Date: 2/6/1998 9:49 PM
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<<I am finding the management of my discout brokerage stock portfolio tedious, ...Anybody got'ny ideas?>>
My first idea/suggestion is: Send me the $400 per month, and I'll give it back to you with 3% interest in 15 years. :)

Ok, if you don't like that idea here's some others.
1) Invest in a Keystone/5 or Formula90/5 portfolio, with a 1 year holding period. Use enough margin at the beginning of the year so that your $400 per month pays it off during that time.

2) Invest with an inactively managed mutual fund, and have them automatically take the $400 out of your checking account each month. I'd suggest looking into one of the O'Schaughnessey Cornerstone funds, or the Vanguard S&P500 or Vanguard Total Market index fund.

P.S. Don't spend that $300K before you get it!

Regards,
Ray

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Author: rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1669 of 76418
Subject: Re: investment stratagies Date: 2/6/1998 9:55 PM
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<<Pixy replied: Listen….Do you hear it? That's the sound of Pixy slowly counting to ten - twice! You want an "optimal strategy for investing," but you find the management of your portfolio "tedious." Do you know how those statements appear to my funny little mind?
[ remainder of Pixy's excellent words snipped] >>

Nah! I like my advice better. He should send me the $400 each month, and I'll promise to give it back some time in the future. ;)

Ray

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1674 of 76418
Subject: Re: investment stratagies Date: 2/7/1998 10:32 AM
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Ray,

<<Nah! I like my advice better. He should send me the $400 each month, and I'll promise to give it back some time in the future. ;) >>

Drat! I was too slow in thinking of that. Now you got there first and beat me to it. <g>

Regards…..Pixy




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Author: TicTocMan Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1943 of 76418
Subject: Re: investment stratagies Date: 2/24/1998 10:20 AM
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<<Nah! I like my advice better. He should send me the $400 each month, and I'll promise to give it
back some time in the future. ;)

Ray>>

Actually, I have an even better plan (stolen from click and clack, the tappit bros.)-- Send me your money and I guarentee a 50% return of your capital

TTMan

ps the prepostion is important

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