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As a self-directed novice investor, with no degrees in business administration or economics, I feel rather intimidated to be "playing with the big dogs", but at the same time would like to share my experiences by giving my two cents worth (pun intended) to those who are thinking of getting into the stock market. So here it is, from a layman's point of view.

I began dabbling in the stock market in 1997 when an interest rate vehicle would only yield 4.5% on a guaranteed basis rate. For those of us old enough to have seen interest rates rise to a heady height of 24%, and dropping down to 4.5% within a twenty year span, the nose-dive was beneath our dignity. Yet in light of the recent turmoil with the "subprime fiasco", 4.5% is looking pretty good.

"Diversification" is a pet word used by the financial world to tell us to be careful. "Diversifying Risk" is a safety-net term designed to help those of us unsure of how we should divide our money in our portfolios. Whom should we give it to? And how much?

It has always been understood, or at least presented in scientific terms that if something goes up, it must also come down at some point. So if one is invested in a sector of the market which is not doing so well, hopefully stocks bought in another sector will counteract that difference. If one spreads equity buys into the various sectors of the economy such as consumer, technology, retail, manufacturing, and utilities, a downward trend would hopefully be counteracted by bonds going up. Safer still might be plain old cash or flexible money markets. Although in recent light, money markets are not as safe as we assume they are because they also deal in equities.

Diversifying risk is a pie where the sections can be cut up according to an individual's leaning. If an investor wants less risk, he will allot more money into interest bearing vehicles and less into equities. If an investor is more adventurous, he will tend toward a heavier weighting of stocks as opposed to bonds. And hopefully, if one piece of the pie gets gobbled up, the other pieces well suffice for leaner times. The dividing of these pieces become our "checks and balances". Unfortunately, in this subprime mess, being in any sector of the market these days seem to be a hazard.

As a trader-in-training, the main ingredient seems to be in determining our "risk aversion". That is, how much money are you willing to lose before it starts to bother you. Most people would say "I don't want to lose any money". If this

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