Page 109

If it had, I would have realized that rate of growth would only still have to be 40% more to be better. If MS stock grew -10%, then another just has to be better than -0.1/(1-.28), or better than -14%.

I DIDN'T NOTICE THAT BENEFIT! If MS were to slump, competitors investment could slump even more + I'd be better off!

WELL I HAVE GOTTEN SOCKED! Of course, I can rationalize:

a) I only had Mon Oct 12 - Wed Oct 14 when MS stock was saleable before it dipped

b) Summer price was around 52.5 so current price isn't so bad.

But if I had sensed MS stock being high at 140 (old scale), and moved to sell say half, I'd be ahead by the amount of taxes. That is, I would have sold 'em at 72, paid taxes, cleared $48/share, and now I could buy em back.

5:30 Back at car, put shoes on, and go get cinnamon roll. Drive to Tim's Point. Write up my thoughts and work out the equations.

7:00 Drive back to Newport Beach.

7:15 Now I guess the upshot of all this is

1) I can't blame myself since I can't predict market aberations, which dragged MS down

2) I have learned that there are definitely no tax reasons not to sell MS stock if I don't expect it to go up, and a tax reason to sell it if I feel its more likely to go down.

These reasons of tax nature balance out if I have no feeling for weather stock will go up or down. I have no such feeling for the S.T. but I feel it's up for the L.T., and I felt the same way last summer, even last week. That is to say,

I DON'T EXPECT ANY INVESTMENT TO OUTPERFORM MS IN THE L.T. OVER 40$, BECAUSE MS IS STRONG.