5 Ques to ask before you...

On a rainy Saturday all I could do was dig up old issues of Money Magazines and re-read them. I have a stack of them - By the way can these magazines be re-sold? or just re-cycled now that everyone is going green? Talking of green, BP has been repackaging their products with greater emphasis on low carbon transport fuels. They had an interesting catch ad in the latest issue of Fortune which reads, "Cars should eat their vegetables too." ha! tell that to people in my village who are used to eating vegetables.

Anyway, back to the old issues of Money. Now that the stock market slumped Friday at the end of Wall Street's worst stretch since 2003 what is it that we should do? Well, the Money issue of May 2004 exclaimed: 5 questions to ask before you invest in stocks... here is a summary;

1. DO I HAVE A PLAN? Settling on an investment mix--the percentage of your portfolio allocated to stocks, bonds and cash--is more important than any one stock pick. Every stock purchase will affect that blend.
2. WHAT'S MY TIME FRAME? Ask yourself when you want your money back. Is this an investment or a trade? The former means that you have a long time horizon and can tolerate price swings; the latter signifies that you want to pocket a quick profit. If you need the money back quickly--say, in less than a year--the stock market is not the place to park it.
3. HOW MUCH CAN I AFFORD TO LOSE? Everyone expects to make money--why else would you buy a stock? But it's easy to get caught up in what's hot, buy at peak prices and lose big, so calculate in advance how much you can bear to see your stocks go down (how does 20% sound?). If you can't accept investment risk, stay out of the market.
4. HOW HARD AM I WILLING TO WORK? Understanding what a company does and how its stock is valued takes as much time as buying any big-ticket item. Staying on top of your investment once it's made isn't as time consuming but still requires a couple of hours a month.
5. WHY IS SOMEBODY SELLING THIS STOCK? If you can rattle off the case for what could go wrong with a stock and still be convinced, call your broker. If not, save yourself from feelings of buyer's remorse and leave stock buying to the professionals. - PABLO GALARZA

Oh! I should add - Do not say, "Why were the old days better than these?" For it is not wise to ask such questions. Ecclesiastes 7:10