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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (14270)	4/5/2002 6:08:00 PM
From: Dale Baker	Read Replies (2) of 78751

An interesting wrinkle from last year - I have two portfolios, one taxable with two accounts and one non-taxable IRA. Because the IRA does not allow shorts, options or margin, I am forced to "behave" and stick to plain stock buying and selling. I also tend to buy more conservative, long-term development stocks. I finished 2001 up a few percent overall - but there was a large gain in my IRA and a not so large loss in the taxable portfolio - simply because I was tempted to take risks and trade more in the taxable account. You would think I would notice after a while that the IRA approach was vastly more successful (and more important, did not lose much when the markets were folding). In late February 2002, I was not happy with my small loss for the year and scoured my trading records for the worst bloopers. Once I identified the clunkers, I set up rules to avoid those losses in the future and mostly stuck to them. The result was the best five-week period since the October rebound. I still don't trade my taxable account exactly like the IRA but I treat it with much more caution, like I treat the IRA. And the approach pays off. So far, at least.

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