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Subject:  Re: Looking for Advice Date:  11/11/2006  1:35 PM
Author:  joelxwil Number:  54315 of 96798

Cramer says not to speculate with retirement assets, but in his segments on speculation he clearly differentiates it from buying stocks as investments. Speculation entails more risk.

However the difference between speculation and investing is hard to define. Generally, it is said that speculators take unusually high risks in the hope of unusually high rewards. Of course that is an extremely subjective definition, since it is difficult to quantify risk. Part of the risk is in the stock, and part of the risk is in your method for knowing when to sell.

I am not opposed to buy and hold in the sense that I would hold a stock forever so long as the chart looks good. Deciding that you will hold it forever when you buy it is simply folly. Things can change. Note, for example, that BRKa has underperformed SPY for the last 3 years, and in fact is more or less a flat line from the first quarter 2004 until about 4 weeks ago. IWM is up 36% over the same period, while BRKa is up 19%. So if you really want to buy and hold something, try IWM. I cannot beat that index either, although maybe if I only included only small caps in my list of candidates I might. I do not think that would be particularly prudent, however.

I have a small taxable account in which I am buying and holding (except if extremely provoked) a collection of mutual funds as the base part. Then I am using the ProFunds for an augmented hedge. So far so good, but it has only been about 6 weeks. The money is an inheritance, and just arrived recently. I will publish the results after about a year. This is a very low risk strategy, and also reasonably tax efficient.
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