PRN: Fiscal Leftovers

Rawhide

Let's call them what they are: interestingstuff related to personalfinance that doesn't necessarily warrantan article or provoke an emotionalresponse. I'd like to think that if suchthoughts caught my interest, one ortwo might do it for someone elsetrolling for insight or a chance to makeor save a buck. As Rowdy Yates (ClintEastwood) used to say on ,"Move 'em out!"So, here are a fewfinancial leftovers to chew on:

•Pay off any high-interest loans thatcost more after tax than what you canmake with the money invested anywhereelse. Likewise, hold on to low-interestloans such as recently refinancedmortgages so you can put a potentialpay-down into a higher yield vehicle.

•Markets discount widely knowninformation; it's surprises that movemarkets today.

•For you compulsive market timers,over a long period, the biggest returnscome between the last trading day ofthe month and the fourth trading dayof the next month.

•Stocks historically have done betterin the first half of the month thanthe second half by a factor of 0.07% to0.02%. Worth it?

•Earning a high return requires takingmore risk, but taking more riskdoesn't necessarily mean you will get ahigher return.

•When you purchase a stock, youdo so thinking that it will be a winner.But keep in mind the fact that you arebuying it from someone who mighthave been very happy to sell it.

•Remember that compounding ismaking a profit on your profit.

•If you were out of the market onjust the 10 best days of the past 10 years,your gain would have been cut in half.The trick is to stay in the market becauseyou never know when those biggain days will hit.

•Studies consistently show thatindex funds outperform more than 75%of mutual funds over any 5-year periodor longer. Ah, but how do you find thenext 25% of mutual funds that will temporarilyoutperform the indexes?

• Remember that Warren Buffettdid not get where he is by investing ineither indexes or mutual funds only.

•People always ask me what theyshould invest in. I always tell them thatwhat matters is how they invest.Studies show that up to 90% of youroverall return is the result of diversification allocation, while less than 5%has to do with individual purchases,and less than 2% has to do with timinghelp. So any way you want to do it, letthe heavy lifting begin.

is a

practicing physician who is a

partner on the Stanford University

Graduate School of

Business Alumni Consulting

Team. He welcomes questions

or comments at jeffebrownmd@aol.com.

Jeff Brown, MD, CPE,