Market not for wimps or the impatient

By MARY HOLM

Q. My first venture into shares was in 1959 and I made money in no time. I thought I couldn't go wrong.

The following years involved repayment of a bursary, raising, feeding, clothing and educating a family as well as financing a home and mortgage, so there was little left over for investing.

By the 80s, however, we had got on top of that and, with the help of Brierley, Chase, Equiticorp et al, I built up a sizeable portfolio and retired in 1985 for a life on Easy St. You can guess the rest.

In November 1987, at the age of 60, I was lucky enough to find a job.

Twelve years later I retired again. By then I had re-established another fairly substantial, well-diversified portfolio. (Diversified into US shares I might add.) Now their worth has dropped a bit, but not too badly.

I tell you all this because, in spite of setbacks, I still believe that long-term shareholding is best for me. However, one thing is certain, it is not for wimps!

Please keep writing.

A. Battle-wounded and defeated, he pulled himself out of the trenches, slunk home for some R&R, and lived to fight another day. He was better prepared for the next battle. And he won!

Yours is probably a fairly typical story of a long-term share investor.

Though it might be hard for recent entrants into the market to believe, many people do too well when they first start out.

That's because, more often than not, the share market is rising. Newcomers tend to attribute their success to their cleverness, when a lot of it is in fact luck.

Such overconfidence doesn't really matter, as long as they don't start putting everything - including short-term savings - into shares. That's when they often come unstuck.

For you, and too many others, disaster struck in the 1987 crash. And in your case the upshot was working until you were 72. That's not easy.

What distinguishes you from many, though, is that you didn't let the crash put you off shares.

What's more, you learned about the importance of diversification.

Even though right now you might wish you weren't in US shares, if you've been in that market through most of the 90s, I bet you're glad of it.

You're right. The share market is not for wimps. Or the impatient. But for those with stickability and guts, and preferably 10 years or more up their sleeves, it can be brilliant.

Q. Like your recent correspondent who finds some of your articles hard to follow, I would find it useful to have a reference of some kind ... if only to remind one of common terms in regular use.

Bracketed explanations would only work if able to be kept fairly brief, but could nevertheless be useful.

Perhaps you should publish a "glossary of terms" one week, as a feature, which the readers could cut out and file.

A. Two other readers had similar ideas, although one suggested the Herald supply a list of definitions on a card and the other suggested a glossary of terms on the Herald or another website.

They're good thoughts, but I've got some pretty strong reservations.

As the man who suggested the card says, "It would probably be necessary to print a new one periodically to allow for both damage and new readers, and also to update it if necessary".

I think that understates the problem. If I don't explain terms, assuming people can refer to their clipping or card, I'm going to leave out in the cold all those readers who didn't buy the Herald on the day it included the glossary, or who have lost it, or whose dog fancied it for breakfast.

Even those who still have the glossary would have to dig it out. Reading a weekend newspaper is supposed to be a leisurely activity, not a research exercise.

The reader who suggested a website glossary lives in Melbourne, and so reads the Herald on her computer.

For her, clicking through to a website would be easy.

But for the vast majority, who read the paper as opposed to the screen, going to the computer would be a nuisance - if they even own a computer and if their kids will let them near it on a weekend.

Again, I think it would be asking too much of readers.

If I adopted any of the three ideas, I'm afraid I would alienate some readers.

I usually give a brief definition if there's been a more complete one in a recent column.

I think, in the end, I'll take up another suggestion. If a somewhat lengthy definition is called for, I'll say "see end of item" and put it there.

Then it will be easy for those in the know to skip over it to the next Q&A.

I do appreciate your input, though.

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