Feeling a little queasy lately? Looking into the mirror and not seeing your old-growth-stock-investor smile anymore? So buzzed out by technology that you're even looking warily at your garage door opener and electric toothbrush?
You, my friend, may be suffering from Year 2000 influenza, a powerful cousin of the ineffectual Y2K bug. This new epidemic can be traced to a pesky infection from a stock market that has lost its sense of balance.Constant viewing of a ticker will not alleviate the symptoms. Nor will the careful tracking of any market movements. Watching television financial reports or staring at the stock pages could make matters worse.
All you can do to fight this thing is sit back, take a deep breath and check all your financial vital signs. This is a time to get back to basics, pay attention to your total financial health and avoid abrupt decision-making.
Your credit, your savings plan, the advice you heed and how you handle your financial transactions must be carefully examined. Don't get caught up in the frenzy of the moment. It's not good for your heart.
First of all, the best treatment involves paying off your credit debt. The costs you'll ultimately save in interest will help you put money into investment vehicles that can help your family's long-term well-being. Investors with heavy debt loads often feel compelled to take on higher risks in their investing strategy to try to make up the difference. That's a bad idea.
Second, make sure you continue to save and invest regularly rather than push money into the market or pull it out based on trading activity. Have money deducted automatically from your paycheck in order to build your nest egg at a bank, mutual fund company or brokerage firm. You'll hardly notice this enforced savings. As part of that overall plan, be sure to take advantage of your company's 401(k) retirement plan, individual retirement accounts (IRAs) or Keogh plans for the self-employed. By emphasizing a smaller, diversified group of investments in which you have confidence, you remain firmly in control of your personal wealth. Pick what works best based on your own tolerance for risk.
Third, be careful about the advice you follow in these volatile times. There are many investment letters, but some editors are quacks. Those that claim infallibility are the most likely to leave you ill.
Always take a trial subscription before committing to any publication. There are often short-term free subscriptions or low introductory rates. Follow the recommendations of the letters during the trial period and see how they do. Long-term results of investment letters are tracked by the Hulbert Financial Digest www.hulbertdigest.com, 5051B Backlick Rd., Annandale, Va. 22003. Hulbert tracks a mythical $10,000 investment and how it has grown or declined based on newsletter recommendations.
The top-performing investment letters based on five-year annualized returns through February 2000, from 104 newsletters monitored by Hulbert, were:
OTC Insight, Jim Collins, editor; focus on NASDAQ-listed growth stocks; Walnut Creek, Calif.; 800-955-9566; five-year annualized return is 70 percent.
Medical Technology Stock Letter, Jim McCamant, editor; focus on biotechnology companies; Berkeley, Calif.; 510-843-1857; five-year annualized return is 56 percent.
The Pure Fundamentalist; Alvin Toral, editor; focus on fundamental stock picking; Hammond, Ind.; 800-233-5922; five-year annualized return 48 percent.
MPT Review; Louis Navellier, editor; focus on modern portfolio theory stock-picking; Reno, Nev.; 800-454-1395; five-year annualized return is 40 percent.
All Star Fund Trader; Ron Rowland, editor; focus on sector and concentrated mutual fund rotation; Austin, Texas; 800-299-4223; five-year annualized return is 39 percent.
If you still feel that regular investing and careful stock selection offers an opportunity your health can endure, go about it intelligently. Buy on market declines and choose your shares carefully. Too many people invest on pure emotion.
Which brings us to the fourth and final point for those who still feel up to the market challenge: If you don't need the hand-holding of a full-service broker, select a low-cost online broker. Online trading is growing with the speed of the Internet. Commission charges are often phenomenally low, just a fraction of even typical discount broker fees. Only invest online if you're confident the firm you're interested in has the services you require and the capacity to keep up with the demands of a gyrating, high-volume stock market.
According to the Gomez.com research firm, the best online brokers, based on criteria that includes ease of use, customer confidence, on-site resources and overall cost are currently (1) Charles Schwab, (2) E+Trade, (3) DLJdirect, (4) Fidelity Investments, (5) NDB, (6) A.B. Watley, (7) My Discount Broker, (8) American Express Brokerage, (9) Suretrade and (10) Morgan Stanley Dean Witter.
Check stipulations on the lowest-priced trades. Realize that services vary from basic trading to multiple features and that each firm has its own particular business targets. Consider what your typical trades are and how they fit the commission schedule. All online brokers receive complaints about lack of efficiency on record trading days, though some have fared better than others. While online trading is the wave of the present and future, growing pains are part of its progress.
Andrew Leckey answers questions only through the column. Address questions to Andrew Leckey, "Successful Investing," 98 Henry St., Dept. 183, Brooklyn, N.Y. 11201, or by e-mail at successinv@aol.com.