Investing Advice from Santa
Dear Santa: You've got to help me out. My stock funds are all down and as a result, it looks like I'll be working until I'm as old as you are and I don't know what to do. Are mutual funds still worth investing in? From a Grown-Up Fan.
Dear Grown: Up, Ho! Ho! Ho! You grown-ups always make me smile. Just like your little ones, you want everything right now and guaranteed. Well, I'll let you in on a little secret that I've never told anyone before: For as long as Mrs. Claus and I have been making gifts at the North Pole, and Rudolph and the rest of the reindeer flying around the universe handing them out, the one thing we've learned is that in good times and in bad, cold weather and hot, life goes on.
Oh sure, some years we've had more money to make gifts than others. And sometimes, when it looked as though we'd never manage or be unable to make it through the year, something would happen and before we knew it, we'd be celebrating a brand New Year! And it's the same with the markets---any kind of markets from vegetable to flower to stock markets.
I've seen markets--even stock markets-- selling things at prices I couldn't believe on both the up and the down side. And, no matter what the circumstance, if I liked the price and thought the company was a sound one, I'd buy up whatever I could afford.
Why, I remember the year Mrs. Claus almost dropped a tray full of gingerbread cookies when she saw me pull up in front of our house with a truck load of blue chips I'd purchased. That was back in 1974.
"Santa, have you lost your mind," she screamed at me through the kitchen window." Those chips aren't worth half of what they were last year."
"Ho! Ho! Ho! I know," I laughed. "But they'll come back, Mrs. Claus. Wait and see. " Sure enough they did and over the next twenty years I watched their value grow and grow and grow. Then, one day 20 years later, when Mrs. Claus wasn't looking, I sold them, took all the profits and invested them into something that would keep the principal safe.
When Mrs. Claus got wind of that, it was one of the brightest days ever here at the North Pole. "Santa," she whispered in my ear. " I was so afraid we'd never recoup the money you spent on those stocks years ago. And then, as I watched them balloon in value, I thought you'd never cash those chips in. But you did. and instead of blowing our fortune on a new SleighBoy 3000 you reinvested it into something safe. What a fine Santa you are."
Ho!Ho!Ho! Mrs. Claus does have a way of making me smile. But in all fairness, she hasn't always been thrilled with my investing prowess as not all of my market schemes have worked out. Sometimes things don't, depending upon when you buy, what you buy and when you sell. Which is why we don't shop one market, we shop in a variety of them.
Over the years, as the number of kids around the world has grown, so has our need for workshop space and the number of elves needed to run the shops. So, we bought some real estate near-by and have added dormers for the elves to sleep in and additional shops for them to work in.
Hum, let's see, right now there's a new building just for the wood carvers, one for the metal tinkerer's and a new high-tech studio. Oh, and Mrs. Claus has even started a on-line business. She's developed a wrinkle cream she knows the ladies will love.
And that's the way it goes with investing---things change. Nothing is ever a for-sure guarantee, and you can always count on a goof-up, unexpected tragedy or something to come along without notice somewhere along the line that will upset the apple cart, so to speak. Ho! Ho! Ho! But don't let any of that throw you off track! Before you know it, it will be Christmas, then New Year's and after a few births and birthdays, graduations and weddings, it will be the holidays all over again. And for all of that living, you'll need money.
So don't say no to mutual funds just because the market's in a slump. Realize that ups and downs are what make market cycles, and that it's best to spread your money around. As I said earlier, life goes on--- and so do the markets.
Now, about that working until you're as old as I am, bit. Here's another little secret--- there's nothing quite as wonderful as being able to spend each and every day of your life day doing something you love to do, and, that pleases others. Spend your days like that, and you'll never grow old.
Dian Vujovich is a nationally syndicated mutual fund columnist, author of a number of books including Straight Talk About Mutual Funds (McGraw-Hill), and publisher of this web site.
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