SAN FRANCISCO (CNN/Money) -
Confused about what to do with your investments? Join the club. Everyone's got questions, and the people with answers seem to be making them up.
I've got plenty of questions too.
My pal Herb Greenberg, writing in Fortune recently, admitted that he's scared you-know-what-less to invest in the stock market. He's got his cash in money-market funds, despite his wife's insistence that the market is the place to be.
Me? Even though I've got all sorts of strong opinions about this or that company, I worry nearly every day about what to do personally. Here are a few of my conundrums:
Wrecked tech. I've been writing persistently and -- no humility here -- accurately for months about the sorry state of technology stocks. The basic argument is simple: Even as the economy recovers, managers of Fortune 1000 information-technology budgets aren't spending their dough on tech. They've got enough routers, bandwidth and supply-chain software.
In fact, they want less. They wish they hadn't bought so much junk during the buildup. That's why the outlook is so bleak for companies like storage systems maker EMC and communications chip-maker Applied Micro Circuits (each of which I've warned about in previous columns).
And yet, a thought occurred to me yesterday. Perhaps I should start making small monthly contributions to that destroyed tech fund I own. Maybe in three years or so it'll come back to within 20 percent or so of where I bought it (ouch!), and then, through the miracle of compounding and dollar-cost-averaging, I'll at least be even.
I mean, I'm not too excited about the tech recovery, but I certainly don't expect the sector to stay down forever.
Fixed income. Like a lot of people, I've got more than a typical amount of cash sitting in money-market funds. I'm hoping to buy a home sooner rather than later, so I want to invest that money conservatively. But keeping it in an account that earns less than 2 percent is just brutal. What I should do is throw it in a high-yield bond mutual fund, right? That certainly would have helped me over the last two years.
But darn, I'm scared about the prospect of rising interest rates, which would hurt the prices of the bond fund. I want safe returns, and I'm not sure I have the guts to see the overall value go down in return for those predictable yields.
AOL Time Warner. There's only one individual stock I'd consider buying, that of my employer, where I already have an obvious conflict of interest. I wrote negatively about the stock in late January, when the shares were worth more than $26. The stock has since fallen to around $22, the price a good source told me the old Time Warner business is worth all by itself.
| |
RECENTLY BY ADAM LASHINSKY
| |
| | |
| | |
|
So shouldn't I buy some AOL now? I'm thinking real hard about it, but so far I've seen little evidence the business is improving. And who knows what other bad news lurks about the online business, advertising debacles and accounting screw-ups? Harrumph.
Energy. Now there's one thing that's working. Oil prices are rising and oil-patch stocks are going up with them. So I checked a couple big fund complexes to see how their energy mutual funds were doing. Vanguard Energy: up 9.7 percent year-to-date. T. Rowe Price New Era: up 7.6 percent. Fidelity Select Energy: up 5.1 percent. But wait a second, isn't this how I got into trouble with my tech fund, buying when (because?) the sector was up?
Like I said, the questions come easily. If only the answers did too.
Adam Lashinsky is a senior writer for Fortune magazine. Send email to Adam at adam_lashinsky@timeinc.com.
Sign up to receive The Bottom Line by email.
|
