WILLIAM B....A friend of mine at work sold a rental house and asked me, about a year ago, what I liked as stock picks....I recommended DELL, but told him he should do the research himself.
He went down to a local stock broker and told him he wanted to put all of his money into DELL...The stock broker told him all the usual things stock brokers are likely to tell someone: "The P/E's too high", "The industry's getting 'mature'", "You need to diversify", etc.etc.etc......so, he ended up splitting his money four ways--1/4 in DELL, and 1/4 each into 3 separate Mutual Funds.
Several months went by and the "correction" of Fall '98 came along and my friend went back to that broker and told him all 3 Mutual Funds were in the hole, and DELL was the only investment worth more than what he payed for it....In fact it had appreciated enough to more than make up for the 3 MF's loss and his entire balance, with DELL, was more than his total original amount of money he had brought to him months before.
Once he got deep in the money I told him about margining, something he had never heard of before...I told him only after he had some feel for "staying the course", and gaining some appreciation on his original purchase.
When someone tells me they went to their broker to talk about what they should buy I tell that that was their first mistake (to go)....The other is to listen.
Regards, George......(Oh, BTW, my friend sold the 3 Mutual Funds and put it all in DELL and margined more shares.) |
