Stocks aren't heirlooms meant to be kept forever

The Leckey File

Your Money

September 12, 2004

Never buy a stock and forget about it, no matter how great you believe the company might be or how sentimental you feel about it.

Over the years, I've spoken to dozens of surviving spouses or children who hold worthless or soon-to-be worthless shares because they had blind confidence in the investment prowess of their dearly departed.

"My Fred knew investments and cared about us," one elderly woman told me. "That's why I kept that stock."

Well, if Fred were still around he'd have dumped that turkey of a stock because he undoubtedly kept up on the prospects and prices of his investments. Many companies were once leaders in their fields before they vanished forever into corporate history.

This extends to companies still around but not performing as they once did.

Two decades ago, Japan's Sony Corp. was the leading consumer electronics firm in quality and innovation. It made a rare misstep when its Beta technology lost to VHS in consumer videocassette recorders, but in other areas such as television picture-tube engineering it remained unbeatable.

Fast-forward to 2004: Sony hasn't had a hit product since the PlayStation video game a decade ago. Its stock is stuck at 1996 levels. It is undergoing consolidation because its engineers stuck with analog technology while other companies jumped on the digital bandwagon. Under fire, it is rushing out new products employing chip design that mixes video games with consumer electronics.

While still a giant, Sony isn't the same industry leader whose stock folks bought years ago.

Follow your investments closely. They're not heirlooms, but rather the financial tools for your family's future.

- Andrew Leckey, Tribune Media Services

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