Outlook Investing
by R4noff

Do you ever despair of the sheer quantity of different investment possibilities? Of course you do! Your choices range all over the map, from stocks to bonds, collectibles to commodities. Then there's the matter of investing styles. Should you invest based on value, technical charting, the Motley Fool portfolio, risk, the USA Today investment column, or just plain hunches?

One style of investing seems quite popular these days. I call it "Outlook Investing," and while it may be exceedingly hazardous to your portfolio, it's worth knowing about, if only to recognize its symptoms amid the confusion that your choices can cause. Simply take your primary personality traits, magnify them intensely by adding the prospect of making or losing money, and let the resulting "outlook" dictate all your decisions for you. Check the categories below and see if you fit an Outlook Investing profile.

**OPTIMIST**

How to tell if you're an optimist:

When stock prices are rising you recognize momentum (!) and want to get on the bandwagon; when stock prices are falling you see bargains and want to buy before their inevitable rebound. You see Chapter 11 filings as turnaround opportunities rather than problems. You regularly invest in lottery tickets.

Optimist investment strategy:

Mortgage your house to the hilt, get the maximum cash advance on your credit cards, and invest it all. Never buy stocks unless on margin; better yet, leverage your money via options and futures. If the stock market crashes or hog belly prices decline and your options and futures prove worthless, you can cover your losses with Plan B: winning the Publisher's Clearinghouse Sweepstakes (after all, you're an optimist, aren't you?

**PESSIMIST**

How to tell if you're a pessimist:

Where some see a growth stock in a hot industry, you see an impending market correction. You recognize "blue chips" for the overanalyzed and boring stocks they are. You can't imagine investing in futures, since you know that tomorrow is bound to be worse than today. You're sure that the only time a stock you're involved with would go up would be just after you sold it short. You'd bury your cash in a coffee can in the back yard, but you know that inflation would make it worth next to nothing by the time you dug it up.

Pessimist investment strategy:

Go ahead and spend all your money as you earn it. You probably won't live long enough to enjoy your retirement anyway. However, being a pessimist, you realize that if you plan on dying young, you probably won't.

**MANIC-DEPRESSIVE**

How to tell if you're manic-depressive:

Your emotional state is often closely tied to a single stock. A week of investing goes like this: Monday, you buy shares due to the tremendous momentum the stock shows; Tuesday, you panic at unfavorable mention on CNBC, selling all shares; Wednesday, you get wind of takeover rumors, buy shares and watch them go up 50%; Thursday, you worry about profit taking, bail out, then watch the stock go up another 30%; Friday, not sure about whether to glad about your 50% gain or depressed about the 30% gain you missed, you just stay in bed. By definition, manic depression is a series of ups and downs. Before investing, you must determine whether or not you *like* being subject to constant mood swings.

Investment approach for calming manic-depressive state:

If you must invest in the market, hedge all of your bets. Cover all positions with offsetting puts, calls, and options. Your portfolio value might not rise, but neither will your blood pressure. Best bet: put your money in the bank and find your way onto a sequestered jury where you cannot read the newspaper or watch CNBC.

Investment approach for enhancing manic-depressive state:

Wall Street is the place for you! Fluctuation is the order of the day. Prices rise/fall, markets belong to the bulls/bears, traders and investors suffer greed/fear, constant tug-of-war between longs/shorts, day traders/investors, and buyers/sellers. For maximum thrills, stick to thinly traded, low-cap stocks in emerging industries (bought on margin, of course.) Then stay glued to your Quotron, watching every 1/8 point movement with exhilaration or anguish.

Finally, even if you are a long-term investor, there is a way to induce a manic-depressive state. Just start an online investment area, with a model portfolio the ups and downs of which you are obligated to explain each and every day. If you don't think that causes mood swings, just read the Motley Fool portfolio breakdown for each day of the past couple of months. Thanks Tom and David Gardner for handling it so well.