Think of it as “The Dell Problem”

Q. I have 24,000 shares of stock in a central Texas based computer company (Dell) that I have held for nearly 8 years. In the past it has done very well. However, in the last year the price of this stock has been bouncing around in a very lackluster manner. I am thinking of selling 18,000 shares and would like to know what you think of that idea, and if I do, where the best place to put the resulting money would be.

Is there anyplace I could realistically double my money in about a year?

I might point out that I don't have a "Las Vegas mentality" which is to say that I am not the gambling type, literally or figuratively.

---W. R., by e-mail.

A. In a bull market like this, even reasonable people develop unreasonable expectations. The first thing you need to do is locate yourself in probability space. According to the Morningstar database, Dell was the second best performing stock over the last 10 years, with an annual compound return of 91.8 percent. Quite a few thousand stocks didn't do as well.

It was also the 10th best performing stock over the last 5 years, with an annual return of 139.5 percent. Buying and holding a Dell is a very, very rare thing.

Even last year--- an extraordinary year for common stocks--- only 1,429 of some 7,667 stocks provided a return of 100 percent or better. In other words, in the very best of years the odds are better than 5 to 1 against a 100 percent return. Stretch it over three years and the odds get far worse.

So instead of looking for another 100 percent a year stock, the realistic question is how much of your $1.2 million in Dell stock should you sell? The answer: sell until you can sleep better. While Dell has a bright future and may soon be a major factor in servers, web appliances, and in web hosting, it is becoming clearer day by day that computing is moving out of personal computers and into the network.

Q. I want to retire at 55 and my husband is ready to retire now. Our home is to be paid off in September 2000 and we own an RV. We love to travel and my husband wants to sell all of our belonging and just full time RV. I want a home base and just don't know if I want to get rid of all my home furnishings (yet).

I have worked for the state for 22 years and can retire from the Texas Teachers Retirement System in 5 more years. I want to see this plan through but my husband wants me to quit and start this new life with him on the road. Would giving up my full benefit retirement with TRS be a wise decision or should I stick it out, even when if I did retire from the state I plan on working for a long time. (I'm close to launching a new career--- I've been taking computer classes for over a year and would love to work in this area.)

---L.P., Houston, TX

A. I can't answer your question as it is stated for a number of reasons. The most important is that these are primarily personal decisions, not financial decisions. While most of us like to believe that somber financial decisions tend to dictate our personal decisions, it really doesn't work that way. Some people find a way to become happy beach combers at 44, others convince themselves they need to continue building their assets when they are 74 and have millions of dollars.

  So let me make some suggestions for important conversations:

•   Has your husband developed a financial plan that will provide you with   the income necessary to sustain you in RV travel for the interminable   future? If you're healthy enough to contemplate full time RV travel,   one of you is probably going to live to be 100. Most people can't do   this kind of analysis by themselves. One suggestion: a visit to the   financial planning tools on the Vanguard website, www.vanguard.com.

•   Many people look forward to a retirement of full time golfing   (fishing, etc.) only to discover that the thrill wears off and there   is more day than desire. I've heard this from RVers--- the pattern is   to do a lot of heavy-duty travel for a year or two and then look for   a place to settle down, with or without the RV. So I'd suggest   renting storage for your furniture and making a commitment for some   period of RV travel, like a long summer.

•   Finally, while there are lots of telecommuters who do computer work,   I've never heard of RVmuters. Your desire to have a longer work career   seems mutually exclusive with you husbands desire to travel full time.

Again, it would be nice to pull the Grim Necessity rabbit out of the financial hat and say that it would be financially foolish to take up full time RVing today. But that would be skirting the central issue: what compromises must a couple make in order to have a life that is fulfilling for both of them?