My Smartest Investment

Flash back several years. The headlines called it a "Global Market Meltdown." Newscasters called it a crash. But what I saw on my computer screen was that shares of Intel were selling for $72. I called that a bargain. The word "crash" is interesting. Cars crash. Yet every day we get into them. The reason we get into cars despite the obvious risks is the same reason we should stay in the stock market. We simply can't get where we want to go without them. Staying in cash is like giving up your car and trying to walk everywhere. Even more interesting is that though a car could take your life, all the market could take is your money. Yet I don't see many people walking. To my knowledge, no one has yet died from "Global Market Meltdown." -- Marion Sutherland, Naperville, Ill.

The Fool responds: Beautifully said. Market crashes will occur, but if you've invested for the long haul, you can ride them out. (In the last few years, Intel's stock price has quadrupled.)

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My Dumbest Investment

My biggest financial blunder was listening to my broker. I bought 50 shares of a company when it had its initial public offering (IPO) in 1986. Four months later, my investment was up 51 percent, and my broker advised me to "sell the shares, take the profits, and don't look back." Being inexperienced, I relied on his advice and sold. Well, the company was Microsoft. I figured you might find it hard to believe, so I've enclosed my monthly statements from that time. -- D. H., Overland Park, Kansas

The Fool responds: We reviewed your statements and wept. By our calculations, those shares would have increased in value from $1,050 in 1986 to more than $650,000 today. A 51 percent return is great, but if you understand the company's business and have faith in its long-term prospects, you can often do much better by hanging on. Your broker earned another commission when you sold, but you suffered a major lost opportunity.

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My Dumbest Investment

A little more than a year ago, I decided to try investing directly in stocks. I had been investing through mutual funds for years. For one dumb reason or another, I thought an investment newsletter would be a good place to start when looking for stock ideas. Surely this would be better than starting with my own ideas. What was I thinking? (I did have my own ideas, including Sun Microsystems, Cisco Systems, and Timberland.) I bought a couple of the recommended stocks and watched while they tanked. Meanwhile, my ideas did better. I should have sold all the newsletter stocks, and eventually did. I still get this newsletter, which always contains an advertisement for the guy's other newsletter. -- H. M., Boston

The Fool responds: Beware the investment newsletter! In your case, your own ideas, presumably based on companies with which you were familiar, clearly were better. Since early 1998, Sun has advanced some 400 percent, Cisco is up about 290 percent, and Timberland is up about 55%. Of course, The Motley Fool began as a newsletter, so they can't be all bad.

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My Smartest Investment

In 1997, I noticed that my husband and I seemed to end up at Home Depot every weekend, buying annuals, fertilizer, wood chips, paint, showerheads, and more. More of our checks were being written to Home Depot than to anyone else. Naturally, when I read the Fool's advice to buy what you know, I thought of Home Depot. I noticed how full the parking lot always was. I read up on the company in Value Line and liked everything I saw, such as steadily growing earnings per share and low debt. So I bought some initial shares through a dividend reinvestment plan and kept making periodic investments. It's risen some 170 percent since then. I recently calculated that we spend about 3.5 percent of our family income there. Funny, I don't seem to mind that expense as much anymore. -- Homemaker, Orlando, Fla.

The Fool responds: You executed brilliantly, finding a company you know and like and researching it before buying. Brava!