Saturday, January 17, 2009

Dilbert on Investing

The Motley Fool interviewed Scott Adams (Dilbert) and got some advice. The article “9 Things You Should Do Instead of Buying Stocks” has an interesting take on the market and ‘Drunken Chimps” albeit Harvard educated drunken chimps.

Adams' passion for personal finance is matched only by his utter disdain for stocks. That's right -- this keen observer of business and management trends believes that most people, himself included, cannot beat the market buying individual stocks, especially when the companies behind those stocks are run by drunken chimpanzees.

And that doesn't even address today's business climate. After meltdowns at Bear Sterns, Lehman Brothers, and AIG (NYSE: AIG) -- and more recently at Bank of America (NYSE: BAC) and Citigroup (NYSE: C) -- it's easy to imagine Dogbert, CEO of Confusopoly (Ticker: HUH), convincing the world's bankers that an active market for commercial paper would melt Greenland. Or that ritual cat sacrifices are the key to saving America's auto industry.

Laugh all you want, but bankers at Bear Stearns, Morgan Stanley (NYSE: MS), and elsewhere are the same Harvard-stupid morons who thought that credit derivatives weren't all that risky. Who's to say they wouldn't believe a cartoon character? Or that they wouldn't find synergies between CDOs and cat sacrifices? They're eerily similar, after all -- both begin with the letter "c."

Adams cites a severe distrust of weasels -- er, management -- as his reason for swearing off individual stocks. He finishes off with recommendations

So, what should you do?Adams has nine steps that he says, when performed in order, can help you to generate -- and protect -- your wealth. We think his suggestions are pretty Foolish, and thus, with his permission (thanks, Scott), we publish them here:
1. Make a will.
2. Pay off your credit cards.
3. Get term life insurance if you have a family to support.
4. Fund your 401(k) to the maximum.
5. Fund your IRA to the maximum.
6. Buy a house if you want to live in a house and can afford it.
7. Put six months' worth of expenses in a money market account.
8. Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker, and never touch it until retirement.
9. If any of this confuses you, or if you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner.
Dilbert Fool

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You are not entitled to your opinion. You are entitled to your informed opinion. No one is entitled to be ignorant.

Harlan Ellison