Investing lessons from 2005

Well, with the markets closed and the S&P 500 up just 3 percent for the year, I’m happy to say my personal investments posted just shy of a 9 percent gain for 2005. In my self-directed account, I ended the year with shares in the powerful mutual fund Perritt Micro Cap Opportunities (PRCGX, closed to new investors as of this fall), and the individual stocks Citigroup (C) and the British bank Lloyds TSB (LYG). … The biggest lesson was: Stop the excessive trading – by which I mean jumping out of a stock after less than a year – and never pay transaction fees for a mutual fund. Just a few trades this year cost me more than 4 percent. Another thing I learned was that picking a good stock yourself is a lot more fun that watching the small moves of a mutual fund. With the high dividends and value of both Citigroup and Lloyds, I’ll be happy to have them in my portfolio for years to come. …

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