Self-directed investment and super Tuesday (#58; Topic D)

If handling investment is difficult, handling a self-directed investment program (SDIP) is doubly difficult. What does one expect to accomplish by such a program? For a retiree, perhaps finding something challenging to do is high on the list. However, to be meaningful, a condition must be attached: the performance of a SDIP must be comparable to -- in the same league as -- that by professional money managers. This reminds me of an article by an amateur racer I read some time ago. He was a collector of Ferrari racing cars. So, one time, the manufacturer allowed him to be in a race featuring legendary professional racers (he mentioned some names but I can recall none). He admitted that while he was physically there, he was mentally AWOL -- and car racing is, for practical purposes, more a physical game than a mental game. Applying this to investment, which is certainly a mental game, one can understand the difficulty an amateur faces -- and I am beginning to appreciate this. Every morning, one must read the papers and otherwise keep informed -- Jim Cramer, who hosts an investment show on TV, admitted that he got up before dawn to digest all these news. Then, the daily events. Today, for example, the OPEC meets in Vienna (about 10 am EST) to discuss oil production (decision, after a 15-minute meeting, the shortest on record: no change in output). In the early afternoon, in the last Fed meeting to be chaired by Alan Greenspan (he retires after today), is another interest hike in the cards? (said to be 98% certain). Then, after the market closes, shortly after 4 pm, Google, a hot stock that is difficult to tame (moving from its IPO's price of 85 (August 2004) to over 470 a week or so ago to about 430 now) will announce its 2005 earnings. And, finally, at 9 pm, President Bush will deliver his state-of-the-Union message. Can an amateur investor keep tract of them -- let alone digest them and make intelligent decisions out of them? A tough challenge, indeed.
Posted 10:55 am, Tuesday, January 31, 2006