If Itching to Invest, Consider A 'Mad Money' Account
We all have to grapple with our inner gambler from time to time.
As stocks show a pulse, some of us are likely getting the itch to make an outsized bet on one tantalizing sector or another. The good news is, you can give in to these urges without sabotaging your portfolio.
Even Benjamin Graham , the sober father of value investing, advised enterprising investors to open a small "mad money" account aside from their portfolio strictly to exercise their speculative demons, in his seminal book "The Intelligent Investor."
"Speculating can be fascinating and it can be a lot of fun," Mr. Graham wrote in the 1973 edition. "If you want to try your luck at it, put aside a portion -- the smaller the better -- of your capital in a separate fund for this purpose."
Mr. Graham's reasoning: Rather than try to squelch the temptation to invest in what seems like a can't-miss stock or sliver of the market, act on it in a sensible way. In fact, indulging yourself in a small side account can help you be disciplined, if boring, with the bulk of your money.
Let's map out three rules for a "mad money" account and then mull some mad investment ideas.
1. Don't bet the farm.
Conventional wisdom says your mad money account should never add up to more than about 5% of your overall portfolio. The idea is that you shouldn't invest much more than you'd take to a casino if you were so inclined. How do you know if you've invested too much in your mad money account? Imagine losing it all and ask yourself if it would affect your lifestyle and psyche.
Test Your Knowledge
Which type of mutual funds have taken in the most money this year, according to the Investment Company Institute?
A. balanced funds
B. money market funds
C. stock funds
D. bond funds
See answer below.
2. Use a separate, taxable account.
To underscore the idea that this "mad" endeavor is separate from your main portfolio, keep it in a separate account, perhaps even with a separate firm. Tracking the account on a different statement from the rest of your portfolio helps cement the idea that it's not money you've earmarked for college or a house or your retirement, says Don Cassidy, an analyst at fund tracker Lipper Inc.
"I tend to keep my [mad money] in a taxable account, so if it blows up at least I get a tax write-off," he adds.
3. Prune, but don't water.
See your mad money account as a mutual fund run by you and assume it's closed to new investments. Maybe the most important "mad money" rule is that once you establish this account, you can only withdraw money, not add it.
If your "mad" investments plummet, you can sell them and pursue other ideas with the proceeds. But you can't sink more money into the sagging account. On the other hand, if your mad-money picks rocket up, at year end you should shave earnings off until the account is back down to no more than 5% of your total portfolio's value.
"If you do happen to do well, you have to take some money off the top," says Steve Henningsen, a financial adviser with the Wealth Conservancy in Boulder, Colo. "You shouldn't allow this sexy account to become a big part of your financial picture."
It's a mad, mad world
Now that you have the rules roughed out, let's turn to the more intriguing question: What to buy?
For starters, it's best for most investors to stick with funds unless they have the oodles of time and the balance-sheet know-how needed to study companies and figure out what they're worth.
In many cases, investors have chased the frothiest, most loved sectors -- think Internet funds -- in these accounts, according to advisers. But it's never good to follow the crowd. Your mad money account is your chance to be the boldest type of contrarian.
Of course, successful contrarian investing isn't as simple as loving the biggest losers. Tech funds, for example, fell 31% on average in 2000, further than any other sector-fund category. But bottom-fishers who bought then saw the nation's average tech fund fall another 36% and 43%, respectively, over the next two calendar years.
In fact, if you'd bought the worst-performing stock-fund category each year in the 1990s, you would've trailed the average stock fund over the following three years more often than not, according to data from Lipper.
There are contrarian strategies that have proven more successful. At the start of each year, Morningstar announces the previous year's three most "unloved" fund categories, measured by their sales rather than their returns. Looking back to 1987, these categories have beaten the average stock fund over the following three years 75% of the time. The study highlighted Latin America, utilities and financial services funds at the start of this year. They're up 30%, 9% and 16%, respectively since Jan. 1, compared with 15% for the Standard & Poor's 500-stock index.
Some would say the most appealing contrarian play to consider for a mad money account today is an Asian or emerging-markets equity fund. Both categories are volatile and underwater over the past decade. Some believe the wave of manufacturing and services jobs shifting to cheaper labor markets like China and Korea could start a long economic boom in these regions.
Also, at this year's Morningstar Investment Conference in June venerable value investors Bill Miller, manager of the Legg Mason Value Trust fund, and Jean-Marie Eveillard, manager of the First Eagle Overseas Fund, both gushed over low valuations in Japan.
Indeed, stocks in the average Pacific/Asia and emerging markets funds trade at about 15 their earnings over the past twelve months, compared with 28 times for the S&P 500.
Whether you find a tech, health-care or Asia fund too tantalizing to resist is your business. No matter what you choose, you can find people who think you're mad to buy or mad to pass it up. In reality, it doesn't matter what you choose, as long as you do it in the right account.
And the answer is…
C. Stock funds, but only by a whisker. Through the end of July, stock funds took in $56.8 billion this year, edging taxable bond funds by a little less than $800 million. Hybrid, or balanced, funds took in $15.5 billion and money market funds had outflows of more than $132 billion.
开立“私房”帐户满足你的投机欲
我们时常要与自身的投机心理作斗争。
由于股市时起时落，有些投资者很可能强烈渴望超量买进一类又一类看似诱人的股票。现在告诉你一个好消息，你可以在不破坏现有投资组合的情况下做到这一点。
即使是价值投资之父本杰明?格雷厄姆(Benjamin Graham)，也在他具有开创意义的著作《聪明的投资者》(The Intelligent Investor)中，建议有胆量的投资者在投资组合之外另设一个“私房钱”帐户，以满足自己的投机心理。
格雷厄姆在1973年版的《聪明的投资者》一书中写道：“投机令人著迷，其乐无穷。如果你想碰碰运气，不妨从你的资金中单拿出一点来试试，但这笔钱越少越好。”
格雷厄姆的理论是，与其压抑对看似诱人的股票的投资欲望，不如将其化为理智的行动。实际上，沉迷于一小笔投资会有助于你更好地约束自己，管好大部份的投资。
以下是开设“私房”帐户的三大原则，随后再为这类投资提些建议。
1.不要孤注一掷。
按照传统观点，私房帐户上的资金不应超过你投资组合资金总额的5%。也就是说，即使你热衷于此，也不要比去一次赌场花更多的钱。怎样判断在“私房”帐户上投入的资金是否过多呢？只要假设这些钱都赔掉了，问问自己那是否会对自己的生活和心理产生影响就知道了。
2.单立一个可征税帐户。
为保证这种疯狂的努力与你的主投资组合“井水不犯河水”，你要单开立一个帐户，甚至可以在另外一家公司开立。追踪基金表现的公司Lipper Inc.分析师Don Cassidy说，使用不同于你其他投资的帐户，可以让你更明确一点：即这笔钱不是用于教育、购置住宅或养老等目的。
他补充说：“我倾向于用这笔钱设立可征税帐户，这样即使这笔投资全军覆没，我至少也能获得税款注销。”
3.只剪枝，不浇水。
要将你的私房帐户视为你自己经营的共同基金，并假设该基金不对新投资者开放。也许私房帐户原则中最重要的一条就是，一旦建立起该帐户，只能往外取钱，不要往里存钱。
如果你的这笔投资一泻千里，你可以将其卖出并用所得进行其他投资，但不要在这个帐户投入更多资金。另一方面，如果你的私房帐户直线上涨，到年底时，你应该将帐户规模减小到不超过投资总额的5%。
克罗拉多州玻尔得的Wealth Conservancy公司金融顾问Steve Henningsen说：“如果你恰巧做得不错，必须削减帐户上的资金，不要让这个诱人的帐户成为你投资组合中的一个重要部份。”
现在，既然你已经大致清楚了投资的原则，我们就转向一个更有趣的问题：该买进什么样的股票？
对入门投资者来说，最好坚持购买基金，直到有了足够的时间，积累了用来研究筛选公司的足够的知识。
据顾问称，在许多情况下，投资者会在该帐户中放入最泡沫而最受他们青睐的类股，如互联网类股。然而，跟风从来不是一件好事。私房帐户是你用以大胆尝试与大众口味相反股票的机会。
当然，成功的反向投资可不只是垂青于跌幅最大的股票那么简单。例如2000年，科技类股平均下跌了31%，比任何其他类股跌幅都要惨重。但那些逢低买进的投资者在随后的两年又分别亏损了36%和43%。
实际上，根据Lipper提供的数据，如果你在90年代任何一年买入了表现最糟糕的类股，通常在之后的三年，该类股仍然会落后于股票基金的平均水平。
反向投资策略也有取得成功的案例。每年年初，Morningstar都会宣布前一年三类“最受冷落”的基金，这个结果是根据销售状况而不是回报率评选出来的。追溯到1987年，这些类型的基金在随后三年的平均涨幅比股票基金高出75%。该研究对拉丁美洲股票、公用事业和金融服务类股基金年初的表现给予特别关注。自1月1日以来，这几种基金分别上涨了30%，9%和16%，而标准普尔500指数上涨了15%。
有人可能会说，当今最值得考虑用于“私房”投资帐户反向投资的，是亚洲或新兴市场证券基金。这两种类型的基金波动都很大，在过去十年内涨幅也都在平均水平之下。有人认为，随著制造和服务业转向劳动力价格低廉的中国和韩国等国家，这些国家经济可能开始呈现出长期繁荣的局面。
在今年6月召开的Morningstar投资会议上，德高望众的价值型投资者──Legg Mason Value Trust基金经理Bill Miller和First Egale Overseas基金的Jean-Marie Eveillard都滔滔不绝地针对在日本的低估价投资发表了演讲。
的确，在过去12个月内，亚太地区平均股票基金和新兴市场基金本益比约为15倍，而标准普尔500指数本益比为28倍。
不管你无法抵御其诱惑的是科技、保健基金还是亚洲基金，那都是你自己的事。无论你作出怎样的选择，都会有人觉得你疯了。实际上，只要你用适当的帐户进行操作，选择哪类股票本身倒无关紧要。
