"I resolve to pay no attention to my own or anyone else's guesses concerning what the stock market is going to do over the next few weeks or months.
"I resolve to diversify my investments with principal emphasis on those industries and companies whose expansion in sales volume and earning power over the years ahead appears inevitable based on all facts now at hand.
"I resolve to think of myself as becoming a part-owner of the business when I make an investment rather than merely buying a certificate that I hope I can sell to someone else at a higher price later on."
That troika of modest investment advice comes from David L. Babson & Co., a Boston money management firm. It was stated in the company newsletter written Jan. 2, 1953.
Thirty-eight years later, personal finance gurus are still encouraging monetary resolve as they and their clients approach a new year. Among their investment mantras for 1991:
I resolve to slow down my spending.
That's the advice from Stephen Prough, chief executive at Western Financial Savings Bank in Irvine, Calif. He thinks many families could easily prune back their discretionary spending and put it into a nest egg. "America doesn't save enough," Prough said, "and I'm not just saying that because I'm in the business."
I resolve to use dollar-cost averaging -- to spend a specified amount of money on investments at predetermined times. It's a boring investment technique, admitted John Butler, chief executive of the Financial Programs Inc. mutual funds from Denver. Regular buying of set levels of stocks, bonds or funds lowers the risk of bad market timing. Many investors can easily do this by joining their company's 401(k) retirement plan. Butler said he's dumbfounded by those who skip these plans, like his own workers who miss out on a plan that matches each $1 of contributions with a $1.50 bonus. "How can they do that?" he asked.
I resolve to use my credit card less.
Russell Diehl, a principal with the Diehl & Co. brokerage in Newport Beach, Calif., said that's the chant in his home for 1991. The best way to cut down is not to ever ask for a credit increase. "Like magic you get it," he said. "And then more money just disappears down that hole."
I resolve to go out and lock-in a long-term certificate of deposit as soon as possible.
That's because Michael Abrahams, a banking analyst at Bateman Eichler Hill Richards Inc. in Los Angeles, said that rates are going lower. Not only is a weak economy cutting demand for money, thus cutting back what bankers must pay for money, federal deposit insurance premiums rise next year. And guess who's going to pay for that? The saver, Abrahams said.
I resolve to review my investments at least annually.
Such a portfolio housekeeping, said Jack Lemein, a bond-fund manager for Franklin Funds of San Mateo, Calif., should not be viewed as an exercise in catching market tops or bottoms. Rather, it should serve to keep your assets in line with your investment goals. Gains or losses during a year may have dramatically altered a portfolio's sensitivity to risk or market swings. "Remember," Lemein said, "there's no such thing as a guaranteed investment."
I will remember that higher yields mean higher risks.
This is particularly true when it comes to income-oriented mutual funds that invest overseas, said Jeremy Duffield, a fund manager with the Vanguard Group in Valley Forge, Pa. These funds have produced high returns mainly due to capital appreciation in the bonds they hold because of the falling value of the dollar. "But the dollar can go up, as well as down," Duffield said.
I resolve to commit my investment money for at least three to five years.
Anything less, said William LeFevre, market strategist for Advest Inc. in New York, is akin to gambling. He recommends keeping a diary of one's investments, writing down not only date and price of purchases but the logic behind the move, the source of the tip and goal price for the shares. "Let profits run and cut losers quickly," he said.
I resolve to be a conservative investor in this climate.
James Skorheim, financial planning partner at the Deloitte & Touche accounting firm in Irvine, Calif. "Accumulate cash," Skorheim said, with a eye to reinvesting it in stocks or real estate when their respective markets stabilize. But be patient, he warned. "Bottom-fishing can be tough," he noted.
I resolve not to eliminate investment choices solely based on commissions.
If loads or fees are the only basis for a decision, investors would never have given money to the likes of master investor Peter Lynch, said Charles Rother, a mutual fund analyst from Los Alamitos, Calif. He said there are many fine load funds that are worth the commission. Although loads and fees can drastically cut total return the first few years, money that can't stay in stocks or bonds for the long term shouldn't be in such assets anyway, Rother added.
I resolve to look at the down side of the markets as well.
Barry Deutsch, a Florida bank consultant, said his own 1991 resolution is to think more about "shorting" stocks -- selling borrowed shares on the bet that you can buy them back cheaper at a later date. "These days it's easier to figure out which stock will do poorly," he said. "Don't fret about selling America short."