Page 398 - How to Make Money in Stocks Trilogy

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• C HAP T E R •

Money Management: Should You

Diversify, Invest for the Long

Haul, Use Margin, Sell Short, or

Buy Options, IPOs, Tax Shelters,

Nasdaq Stocks, Foreign Stocks,

Bonds, or Other Assets?

Once you have decided to participate in the stock market, you are faced with
more decisions than just which stock to purchase. You have to decide how
you will handle your portfolio, how many stocks you should buy, what types
of actions you will take, and what types of investments are better left alone.
This and the following chapter will introduce you to the many options
and alluring diversions you have at your disposal. Some of them are benefi-
cial and worthy of your attention, but many others are overly risky,
extremely complicated, or unnecessarily distracting and less rewarding.
Regardless, it helps to be informed and to know as much about the invest-
ing business as possible—if for no other reason than to know all the things
you should avoid. I say don’t make it too complicated; keep it simple.

How Many Stocks Should You Really Own?

How many times have you been told, “Don’t put all your eggs in one bas-
ket”? On the surface, this sounds like good advice, but my experience is that
few people do more than one or two things exceedingly well. Those who are
jacks-of-all-trades and masters of none are rarely dramatically successful in

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