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If a retiree wanted to play it safe, but only had a small amount to invest, what I would suggest in the way of a small portfolio would be a three stock "Giant Squid": one third of your money in SPY (mirrors the S&P Index), one third in QQQ (mirrors the Nasdaq 100 Index) and one third in DIA (mirrors the DJIA). (These are unit investment trusts available on the AMEX.) These three stocks will smooth out the differences between all three Indexes and give you a very well diversified large cap portfolio of both growth and value stocks. (You can use a money market fund to store three or four years of living expenses for riding out bear markets.)
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