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From: johnl@haddock.UUCP
Newsgroups: net.invest
Subject: Re: IRA INVESTMENT DIRECTION QUESTION - (nf)
Message-ID: <76@haddock.UUCP>
Date: Mon, 5-Mar-84 23:37:07 EST
Article-I.D.: haddock.76
Posted: Mon Mar  5 23:37:07 1984
Date-Received: Wed, 7-Mar-84 07:22:25 EST
Lines: 44

#R:eisx:-69500:haddock:11900003:000:2316
haddock!johnl    Mar  4 18:45:00 1984

If your prime goal in managing your IRA is safety, then indeed a sensible
strategy is to diversify, although it seems to me that putting the money
in a bank IRA account which is insured by the government and pays in the
vicinity of 10% is even safer.

On the other hand, if you're in your 20s or 30s, you aren't going to be
taking any money out of your IRA for 30 or 40 years, and you'll probably
be making a lot more in the future than you are now.  This means that
safety may well not be your primary goal at this point.  You might
consider wild speculation.  Historically, the overall return from risky
investments is much better than from conservative ones, although the
variation is a lot more.  (This is why U.S. government bonds pay
relatively low interest - there are few surprises.)  So if you take a
bunch of flyers now, a few of them might hit, and the odds are that
you'll make more than if you stuck with a bank, mutual fund, or other
conservative investment.  You can always switch to more conservative
investments later if you get nervous, and when you're older and richer,
you'll likely be able to save more if you still need to.

Moreover, most of you reading this have an advantage over the general
public in that you know a lot about computers and can make better
assessments than most people about computer stocks, at least.  [For
example, it's pretty clear to me that companies making IBM PC knockoffs
are in trouble, since IBM has shown that they want the whole market; e.g.
the new portable PC does roughly the same as a Compaq and costs slightly
less.  Compaq is OK for now, since they have a portable XT and IBM
doesn't, but the handwriting's on the wall.  Same for Eagle, Corona, etc.
Better to find somebody with products that go into some niche IBM
doesn't or else complement IBM stuff like Lotus does.  End of
digression.]

Now, if you're the kind of person who gets nervous every time your NYNEX
stock dips a quarter of a point, or if you find financial reports
baffling, the risky strategy isn't for you.  But if you don't need the
money right away (clearly, or you wouldn't put it in an IRA), are willing
to take the risk of losing it, and have some interest in researching
stocks and stuff, it's worth a thought.

John Levine, ima!johnl

PS:  I have this great oil drilling deal ...