1. Archive

Losses counted, lessons recounted

Sometimes, it helps to talk about it.

With Standard & Poor's 500-stock index on track for its first calendar-year loss since 1990, it's clearly been a gut-wrenching year for investors. What can we learn from all the turmoil? That was the question I posed in my Dec. 5 column.

You responded with hundreds of e-mails and letters, detailing your triumphs and tribulations. Below are just some of your comments, which I edited for brevity.

Waiting by the exit: When you buy a stock, you should buy it with a specific sell point on both the downside and the upside. If a stock falls 20 percent, sell to cut your loss. If it goes up 25 percent, sell to book your gain. I bought Williams Communications Group at $24, rode it to $60, never sold and today it closed at $12.06. Enough said.

J.C. Ferguson, Harvard, Mass.

Winning by losing: This year's volatility didn't faze me because I knew my automatic monthly investments would buy more shares when the market dipped. Dollar-cost averaging may be put down as unsophisticated investing, but I'm sure I sleep a lot better than the pros.

Joe Tigue, Westbury, N.Y.

Fallen idol: I bought Xerox at $10, thinking that it had certainly bottomed by then. Before long, it was at less than $5. My lesson: Any single company, even the great American icons, can fall and fall precipitously.

Robert Sandholzer, Webster, N.Y.

Don't look now: I learned that my risk tolerance is not as high as I thought it was. I find myself checking my 401(k) investments constantly, and I'm only 29 years old and have a long time until retirement.

Maria Cancelosi, Cherry Hill, N.J.

Loving them to death: I just loved all my stocks and couldn't bear to sell any, even when I knew I should. I purchased 300 shares of a tech stock at $25 and, in early March, talked about taking profits. But I got busy at home and work, didn't pay attention and now it's at $2.19.

Jan Konesey, Dover, Del.

Giving at the office: For the last several years, I traded funds in my 401(k) plan. The strategy worked well until this year. In March, I got caught with all my 401(k) money stuck in the tech-heavy funds. I would be so much better off if I had simply left my 401(k) alone.

Russell Miller, Brick, N.J.

Losing touch: Every time I touch my money, I lose 5 percent. If you must tinker, use only a little money. If you use a lot of your money, you'll regret it.

Bill Mueller, Cheshire, Conn.

Class act: One fun thing about this year's market losses is I can take one of my mutual-fund statements to class and announce that I "lost" $10,000 so far this year. Gasp! But then I tell my students this puts me back only to early 1999 and that in the long run this is a simple market correction and nothing to be concerned about.

Jean M. Lown, Logan, Utah

A quieter life: Owning individual stocks was not the wisest strategy for me. Would indexing have improved my returns? Regrettably, the answer was a definite yes. From now on, index funds will make up 75 percent of my portfolio. My returns, in the short term, will never be exciting, but indexing will allow me to get a life.

Nicholas P. Caragules, Flushing, N.Y.

Mother knows best: My grown sons were constantly on my case as my investment portfolio trudged along and theirs were skyrocketing. They would nag me to get with the new economy, flip initial public stock offerings and so on. But when this year closes, my portfolio will be up. Meanwhile, the boys are keeping a very low profile.

Helen Euston, Jacksonville

Not so sure: Never again will I say, "I'll just concentrate on a couple of sure winners." I rode those sure winners as they went up _ and as they went down.

Frank Middleton, Fort Lauderdale

Stayed too long: I should have rebalanced my portfolio after screaming run-ups in a few stocks morphed a fairly diversified portfolio into a lopsided one. For instance, after owning Intel since 1991, I was giddy with its lofty price and I held too much. Instead of waiting to eke out a few more points and trying to avoid capital-gains taxes, I should have sold a good portion of it.

Natalie Bierley, Des Moines, Iowa

Hidden risks: Earlier this year, I began to take technology from my portfolio. Still, my account lost money in most months. It took a while to realize how much technology I still had hidden away in some of my funds.

Joseph W. Boulanger, Arcadia

Silencing of the lambs: Up until March, students, other faculty, barbers, neighbors and every third person at a party quickly and without prompting shared the fact that their portfolio had risen 30 percent, 50 percent or 100 percent in the past few months. In recent months, since Nasdaq has fallen from its lofty highs, people don't feel the same need to update me about their portfolio.

Robert J. Gitter, Delaware, Ohio

_ Jonathan Clements writes for the Wall Street Journal.