Strategies for your nest egg
(Fortune Magazine) -- When the editors of FORTUNE told me I was going to be called upon to cap off this special issue, I was humbled, I don't mind telling you. I don't believe it's an exaggeration to say that I have been possibly the most consistent investor in the history of global capital. Everything I have done has failed. If someone had looked at my decisions since the early 1980s and done the exact opposite, he would have earned a four-digit compound annual growth rate on his investment.
That said, hope springs infernal in the human beast, and I've developed a new approach that I do think is likely to hatch some success. The idea came to me when I was in the shower at 6 a.m. because I have to get up and go to work because my investments haven't paid off and I can't retire early the way people who invested in either Warren or Jimmy Buffett can.
Here's the concept: All of us have a daily, weekly, and monthly nut to crack to pay for food, water, electricity, travel, and alimony. Everything left over may be considered one's "nest egg"--a sum that, if properly utilized in the investment space, will grow and produce a chicken one may either braise, broast, or use to make more chickens. The key is what you choose to do with the egg. Here are what I see as the alternatives.
n Coddled: You can treat your nest egg with exquisite care, placing it in a very safe place, like the bank. That will ensure that your egg doesn't break and spill gooey stuff all over the place. The problem with this is that while it safeguards the egg, it does little to help it grow. You leave a tiny, speckled robin's egg in there, and when you come back looking for an ostrich egg, you're disappointed.
n Poached: This is the most conservative and gentle approach one can take while still committing the egg to some heat. The key here is the temperature of the water, which needs to be simmering but not at an outright boil. For this purpose, I would suggest long-term instruments such as tax-free bonds, real estate in solid but moderately growing markets, and established securities that are likely to pay dividends even if year-to-year expansion is unspectacular. That way the egg is unlikely to explode and ooze white stuff all over its shell. I hate that.
n Hard-boiled: Contrariwise, some prefer to heat the egg slowly but surely until it attains a solid state, then put it in a cold place to be eaten much later. That has positive points, except when you forget about it in the back of the refrigerator or mutual fund, and by the time you look for it again, it's shriveled and disgusting.
n Fried: This is a step up in risk, but to my palate is more delicious and a lot more fun. You can do it over easy or sunny side up. Both methods require you to crack your eggs and put them in a hot place, like a startup interactive web 2.0 service that only somebody with a soul patch can understand. If you're doing your egg over easy, as the sector you're in reaches maximum heat, you quickly turn it over into an adjacent but slightly different place in the same pan. For this you need a gentle spatula. Mine is at Smith Barney.
n Scrambled: Most wise analysts advise against putting all your eggs in one basket. A good scramble puts that risk to rest. Into the bowl with it! Perhaps a bit of milk, water, or fossil fuel to make the mixture easy to handle--and then onto the stove! A short time later your nest egg has fluffed up nicely and is ready to slip onto the plate, a saucy mélange of industrials, blue chips, and perhaps a few high-risk long shots for seasoning. A lot of people like that line of attack, but frankly I get a little nervous. It's a little haphazard for my stomach. Instead, I tend to favor &
n Omelet du jour: To me, a more balanced approach ensures a more satisfying meal. That's why I'm going for a sensuous frittata of investments. You can scramble up the basic component, sure, but as soon as that's set into shape you can add in all kinds of great stuff, depending on what you like. If you're a Spencer Johnson fan, you can even move your cheese into it or, if you like to listen to a guy like Jim Cramer, ham.
One thing's for sure: Just rolling the nest egg under your bed or carrying it around with you is no answer, as your precious object could easily slip through a hole in your pocket or get squished there while you're looking for your keys. At that point all the king's horses and all the king's men won't be able to put your investment albumen back together again, and &
No. I'm not going to say the yolk will be on you. This investment stuff is serious business.
Stanley Bing's latest book, 100 Bullshit Jobs & And How to Get Them (Collins), is available at finer bookstores everywhere. He can be reached at firstname.lastname@example.org.