Volcanic Ash

Many years ago, my husband and I accumulated some money, and he asked me to help him find a good investment. Noting the boom in computers, printers and copiers, I suggested a particular paper company. Because of its timber holdings, the company didn’t need to buy pulp, as it had its own source of raw material. We invested our nest egg in it.

Shortly after making the investment, the IRS changed the tax rules for valuing timber, and this hurt the company. Then, in 1980, Mount St. Helens erupted, and thousands of acres of the company’s timber were destroyed. My husband no longer asks my opinion on investments. — D.D., Silver City, New Mexico

The Fool responds: Don’t be too hard on yourself. Even the best investors regret some investments. It was a mistake, though, to put all your eggs in just one basket, because even terrific companies can fall on hard times. It’s best to spread your assets over perhaps 10 to 15 investments -- or simply to park your money in a broad-market index fund that will instantly have you diversified.

You were smart to think about which businesses were booming and had promising futures and to look for adjacent industries that might grow with them. Patience is helpful for investors, too. The company replanted more than 18 million new trees over seven years, and its stock has averaged 7.5 percent annual growth since the eruption.