No guarantees
Back in the early 1980s, I met a broker through friends, and in 1987, I agreed to let him manage my retirement account. He asked for full authority on the account, since he didn’t want to bother me each time he had an idea. I agreed, nervously. Remember that interest rates were still relatively high in 1987; many CDs were offering more than 7 percent.
One day he called to say he had put all of my money in a stock called Virtual Reality. This was supposed to be a hot stock in a new field, and we were in on the ground floor. He had all of his money in this stock, too. When I complained that this wasn’t what I had in mind, he guaranteed I wouldn’t lose money.
The stock market crashed in 1987, and so did my stock in the still-unprofitable company. I lost my money and my broker lost everything, too — including his wife and dogs.
I learned that I’m responsible for my own investments, that no one cares as much about my investments as I do, and that investing isn’t difficult if you’re conservative and have good reasons for each investment’s place in your portfolio.
— M.A., online
The Fool responds:
It’s always risky to put all your eggs in one basket — especially when it’s a new, unproven company. And when it comes to stock market investments, be wary of any guarantees.