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Saturday, October 11, 2008

Dumb Luck Investing Update

Here is the bear market tally sheet.

From the bull market highs:
DOW down 40.3%
S&P-500 down 42.5%
My portfolio is now down 16.5%

On September 4, my portfolio was sitting at 45% equities, 55% cash.

As of Thursday, October 9, the crashing markets had withered my equities down to 36% of the total portfolio value, which put the cash portion at 64%.

On Friday, October 10, I moved some cash over to the equities, changing the allocation back to 45% equities, 55% cash.

Yes, my overall losses are now large enough to give me chest pains, but I’d rather be in the market than out of it, and down 16.5% rather than 42.5%. I’m sticking to my investment plan, still adhering to my personal rules and trading limits. My system will never make me rich; the design is to achieve modestly high returns on the upside and keep me from the poorhouse when the markets catch Federal Reserve resistant venereal disease. Most investors are their own worst enemy, and my system helps protect me from me. Nothing can protect us from our government, or criminals on Wall Street.

If the markets continue to crawl or freefall ever lower, I am in a position to do more buying. Am I prepared to go 100% equities? The fastest that my personal rules allow me to move the amount of remaining cash to equities would be in increments over the next 5 months. We shall see.

James A. Zachary Jr.

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