Serious advice on investing presented in a whimsical way.

Being a child of the depression, I find caution well worth the price. I nurture, pamper, and feed my caution to make reasonably sure that I don't end up in the poor house.

The poor house? Well we used to have that fallback alternative. Today, I'm not sure. The poor houses of today don't seem to be sturdy and reliable as they were in my youth. They might no longer be there to provide oldsters with even that option.

My objective today is to keep my tummy thin and my checkbook fat. Since both objectives require discipline, I've developed the following rules to keep my targets in reach.

1. I try not to consume more than my body weight during any 48-hours. Food cost money. I also tend to get fat whenever I average more than thirty-six five course orgies per week. Being a lover of food, I find those limits tough, but the alternative to disciplining myself involves putting on weight.

2. I control most of my funds. I don't let an advisor take over my checkbook. That tactic is like letting a hungry cat baby-sit mice. In one case, the cat gets fat and the mice disappear. In the other case, I feel that my checkbook would get thinner than my hair and my funds might go the way of the mice. It's bad enough to lose a dollar or two by putting my savings in the wrong dot-com flyer. It's much worse to have someone who has no vested interest in my welfare get the pleasure of spending my money.

3. I Diversify, making sure that no more than ten-percent of my eggs are located in any one basket. That way, if my weakest basket gets hiccups or develops large holes, I don't have to scrape two dozen yokes off the sidewalk and turn them into mega-sized omelets in order to keep from starving. For anyone who thinks that I'm overcautious, look at what happened to those who put all of their savings in Enron. Gamblers who splurged on Enron lost large chunks of their savings. Those who limited their investment in Enron to less than ten-percent of their holdings didn't have to eat scrambled nest eggs nearly as long or as often.

4. I sleep comfortably with part of my savings guarded by the Dogs of the Dow. The Dogs of the Dow represent the ten Dow stocks providing their owners with the highest dividend yields. Historically, the Dogs of the Dow outperform the Dow Jones Averages on a year-to-year basis with very few exceptions. Even the exceptions are minor. As a consequence, this stock strategy provides me with an investment in ten of the largest and most well known companies in America. They also provide relatively good dividends. If any Dow stock goes bust, the entire stock market is in trouble. If all ten of the Dogs of the Dow went bust, we would be in a gigantic crisis that would make the 1929-1941 depression look like Nirvana.

5. In order to keep my investments from becoming too boring, I set aside a little mad money. It's something like playing the lottery. The chances of my hitting it big are rather remote but I still have fun trying. Once in a while, I get lucky and pick a big winner. That makes me elated and for a moment I feel as though I've shown the world how smart I am. Then, I look at the cut the government will get if I ever decide to cash in. To keep from letting Uncle Sam take all my winnings, I use the stock for making charitable gifts. There are phenomenal advantages in giving a stock that quadrupled in price to you church instead of handing them cash. The only problem is that many churches and charitable institutions don't have the procedures in place for accepting your stock and documenting your gift. If they knew what they were missing, I'm sure that they would.

6. My final requirement is getting my wife involved in the game. I keep a ledger that identifies where all my spare pennies reside. I document the names of the institutions, their phone numbers, and the individuals to contact. Then, I go over the list every month or two so that my wife knows what I am doing and why. Should I pass on before she does, I don't want my wife having to sift through all the clutter I have in my den. It is very traumatic to lose a partner. It can be devastating to lose a partner and not be able to find the money that he or she set aside for paying the bills.

If this treatise confuses you, just remember the three most important rules of investing. They are:

a. Diversify.

b. Diversify

.c. Diversify.

In other words, don't put all of your eggs in one basket -- or one stock -- or one mega-sized vault. Diversify.

THE END

This is a modified version of a piece posted on Suite101.com