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Re: amateurs, professionals, mutual funds: >> . . they are overhung with fear
and would go in for below 20 stocks as they perceive lesser risk in those.<<
:::
I'm not sure I believe that Narayan. I wouldn't put down amateurs by
generalizing. I am quite sure there are many amateurs that do quite well and
outdo the pros without looking at small-priced stocks. It's a state of mind
and what you believe in or have been taught. I am not a stock player myself,
but my ex-wife is (well, investor, not a player). She took one or two night
classes on investing 17 years ago. She was taught to pick areas that she was
familiar with and/or stick with quality. Therefore, if she has $3000 to spend
and the stock she decides on in the morning is $65 per, she'll say "give me
$3000 worth. (The broker puts the change in a cash fund.) And she doesn't get
in and out a lot. " She started out in drug stocks and medicals and zero-
coupon bonds (zero's because the instructor said they were a new thing that
might do well) many moons ago. She knows beans about the technologies but she
likes and buys them currently because they go up. She watches the Business
Market wrap-up on TV and listens to the investing programs on the radio while
she's driving (unless she's listening to a language tape or the opera.) Her
analysis of a chart, (if you should show her one) amounts to the comment,
"What's that. I didn't know they had pretty things like that." Today, she'll
still recommends Microsoft because she thinks that's a good stock, but she was
saying and buying it in 1986 also. If she can afford only one share of
Berkshire-Hathaway today (I think she has at least two, of the Class A),
that's all she'll buy. Her rationale is "it's been doing well for quite some
time." Our son-in-law, who analyzes stuff to death, however, tells his kids,
"How come the stocks Grandma picks go up, and my selections stay the same or
go down." He's learned to listen more and analyze less. The mother of a young
singer friend thinks broker's recommendations are a pox on humanity, yet she
outdoes any fund that I know of year after year. My lawyer cousin listens to
his broker's (a pro) hot tips on stocks "he can afford," and often loses his
grubstake. That's why he says he can't retire. His daughter now works for
Pfizer, a good old company, so at least he bought some of that last year, and
it doubled in the interim. Til later, Larry Z.z. Seattle.
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