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Five Reckless Year End Tactics


Why bother saving when you can do your bit for Truth, Justice and the American Way by spending 110% of your income?


Here are five things guaranteed to pummel your portfolio, or at least give your financial advisor the fantods:

The Falling Dollar Makes Penny Stocks A Steal

Cynics may call 'em penny-ante stocks, but do the math: Each downtick in the dollar makes 'em cheaper by the dozen. Some may argue that any dog priced at 10 cents a share comes with fleas, but some mutts do tricks and jump to 75 cents. Hey, that's a 650% return. Who needs fundamentals if there's a deft spam campaign backing a penny stock's meteoric rise? Suckers of the world, unite! Think of all the beer in yuppie long-neck bottles you could buy if you devoted your entire portfolio to penny stocks. All you've got to do is dump those hideous blue chips with their bothersome (especially at tax time) dividends.

Chase Past Performance

There's no need to do your homework if you simply buy last year's sizzling mutual fund or load up on stocks in a trendy but fading sector. You've probably heard folks say that past performance isn't indicative of future returns. Yeah, so what? There's money to be lost by following the thundering herd – yours. When in doubt, be a reflexive contrarian. Gold? Phooey. Base metals are the wave of the future.

Follow The Investment Advice of TV Gurus

You know the type: General Motors could crank 'em out at an obsolete stamping plant and undercut all those bright Wall Street MBAs and CFAs if it weren't for the (endlessly flogged) Ivy League education, turbo-charged manner and cascade of startling insights delivered at top volume. You, too, can become a big-time stock swami: hyperventilate, act like a donkey around your whip-smart and attractive female interlocutor and routinely blather endlessly about everything. In the meantime, call your financial advisor after every show and say you want to buy a boatload of whatever the TV wise man babbled about that day.

Muscle Up With Commodities and Options

You'll dazzle your date with endless jibber-jabber about put and call options, futures and other inside baseball stuff. Toss in some corn – you know, the federally mandated ethanol boondoggle – hog bellies and manganese and the evening's prospects will heat up like black lace on a red-hot griddle. Just be sure to ask your date to pick up the dinner tab before checking your portfolio's performance for the day.

Spike That 529 College Savings Plan

Pitting a zippy red sports car against your kids' future is no contest. You worked your way through college by denuding old-growth forests and there's no reason your kids can't do the same because you want – need – that car now. What's a little crushing debt at graduation except a dry run for being a member of Congress? In any case, what's the big deal about a college degree? Microsoft's (MSFT) Bill Gates is a college dropout and he did OK.

However, you could set aside money each month in a savings account and ponder the glory of compound interest, read the prospectus before investing and diversify your holdings. You could even take a look at Exchange Traded Funds on the theory that you'll get diversification at low cost because, unlike a mutual fund, ETFs aren't actively managed.

But why bother when you can do your bit for Truth, Justice and the American Way by spending 110% of your income? Saving for a "rainy day" doesn't make any sense. Rain is good for little furry creatures. Without rain, where would the rain forests be?

So, what's it going to be – hours spent reviewing the quarterly statements filed with the Securities and Exchange Commission in search of long-term winners like Wells Fargo (WFC), Chevron (CVX), Genentech (DNA), McDonald's (MCD), Apple (AAPL), Baidu (BIDU) and Intel (INTC) or instant gratification stoked by the rare (some might say half-baked) insights of some TV yakker?

Don't make these mistakes with your own finances. Click on the stories below for ideas and solutions that will help you build and preserve your wealth:

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No positions in stocks mentioned.
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