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Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: Paul A who wrote (11296)	3/11/2001 12:57:05 PM
From: DlphcOracl	Read Replies (1) \| Respond to of 37746

Paul A: In response to your question: I am probably not as active a trader as you are, but several things you have mentioned in your post struck a responsive chord. Over the past year, I have found that I have become pre-occupied by the market, "researching" stocks, trying to time individual stocks and move in and out of them nimbly, etc. Quite frankly, it has resulted in many sleepless nights, not to mention exorbitant trading costs, an incredible mess to wade through at income-tax time, and inconsistent profits. The key word is "compulsion". I feel that much of this, in my case, is a form of gambling addiction, the need and reward of "hitting the home run". I also find that investor psychology, where a bad trade hurts and bothers me disproportionately more than a good one, also contributes to my anxiety with this type of investing. At present, I am holding 95% cash with only a handful of individual stocks. My individual solution to this is that over the next 3 to 6 months, I am dollar-cost-averaging into a basket of 10 to 12 mutual funds that I will only look at and evaluate at the end of a given year. The funds will be allocated between large, mid and small cap, value and growth, an international fund, and several sector funds in areas where the demographics over the next decade are favorable (healthcare, financials/brokerages, energy & natural resources, and technology). No individual fund or sector will be overweighted. I will set aside 5-10% in cash for "emergencies" and to invest in a beaten-down stock or two for a 6-12 month hold. I moved out of mutual funds three years ago because I felt that they were overtrading and generating excessive tax costs without satisfactory returns, especially when measured against selecting individual tech stocks. Now that the hyper-bull market is over, I think they make more sense. The portfolio turnover most mutual funds now have has become appropriate for this hypervolatile investing climate and a more balanced investment approach will make sense over the next 2 to 3 years. It will also give me a peace of mind that I have not had over the past year regarding my investments. Undoubtedly, many astute traders on this board and others will outperform me and my mutual fund basket approach. However, I am retiring shortly and want to free myself from the computer and the time it takes to successfully trade stocks. The 5-10% cash I use for the occasional investment should, hopefully, help satisfy my compulsion for trading stocks. There is no book to help us with our compulsion. Ultimately, each of us needs to decide what to do to achieve peace of mind rather than maximum return with our investing portfolios. Good luck with you investing and investment choices. DlphcOracl