An article that sounds like it's about Bob but doesn't name him. If it isn't about Bob, is there a Bob twin somewhere with the same advice? <g>
marketwatch.com
By Paul Merriman
Last Update: 12:04 AM ET March 6, 2002
SEATTLE (CBS.MW) -- Every experienced investor has suffered losses, and most of us have wished at one time or another we could only get back to "break-even" status so we could start out "whole" again.
But breaking even isn't what it's cracked up to be. In fact, it can be a trap.
Ernest of Eugene, Ore., may have a long wait ahead of him. He wrote to say that a year and a half ago, on the advice of a popular financial radio show host, he put one-third of his portfolio into the QQQ tracking stock, essentially an exchange-traded fund that invests in the Nasdaq 100 Index ($NDX: news, chart, profile). "I can't bring myself to sell this until I break even," he said.
In this case, breaking even is a pretty tall order. This reader's $400,000 investment in QQQ (QQQ: news, chart, profile) is now worth about $150,000. That means he has a 62.5 percent loss. To make up that loss and break even, his investment must go up by 167 percent......
The second issue this reader should think about is the source of his investment decisions. Ernest said he invested in the QQQ solely on the basis of a radio show host's opinion that late 2000 was "the time to get back in" to technology stocks.
If an investor wants to rely on such recommendations for 5 to 10 percent of the investments in a portfolio, that's no problem. But it is reckless and irresponsible to commit a third of one's life savings on such a whim.... |
