During period from 1/25/91 to 10/13/00 my $10,000 investment grew to $37,840, which is a 14.67% compounded annual return.

On 10/13/00, based on a methodology I was following, I liquidated all of my domestic mutual fund positions and moved 100% to safety of my money market account. Thanks to this move, my portfolio retained 100% of its value on that date.

As we now know with hindsight, most people held on to their investment positions and have so far lost on average 50% to 60% of value of their portfolios. For this example let us use 50%.

If I had held onto my position, my portfolio would be down to $18,920. Last time I hit that level on way up was in 1995.

In other words, not only would I have lost 50% of my portfolio I would have lost even more by having used up 20% (8 years) of my total financial life.

How can you avoid mistakes like that in future? Spend a little of your valuable research time looking for investment methodologies that allow you to side-step bear markets and let you move back in during bull markets. In other words, invest your time looking at methodologies instead of investments themselves. This will lay foundation for more effective use of your money and time.

If you find a methodology that you like, and it matches your investment philosophy, stick with it for long term. It should have aspect of telling you when to get out of, as well as when to get into, an investment.

I suggest you follow these broad guidelines:

• Don't be afraid to take a small loss to avoid bigger disasters.

• Stay away from commissioned sales people (because they have incentives other than your best interests), and if you use an advisor, be sure he or she is fee based.

• Above all, don't get overwhelmed by news, rumors and predictions that are irrelevant to your strategy.

If you take this advice, I guarantee that pretty soon sleepless nights will be a thing of past and you'll be on your way to more confidently and successfully (that means profitably) managing your investments.

So what's point in filing an extension if you still have to pay tax?

Three possible scenarios -- first, some folks get most of their "tax stuff" organized and are able to get enough of their return done to get big picture: "Do I owe or am I getting a refund." You do calculations, see where you stand, and if you owe, send in extension form with a payment that's pretty close to final figures.

You may have a few deductions that you need to research, one last shoebox to peruse. You need more time, that's all.

Second, you're running way behind on tax matters this year. Hey, it happens! There's no way you're going to get return done on time, and you know you'll probably owe, so, be sure to file extension, even if you don't know how much you may owe or even if you can't make a payment with extension. The reason? Because there are penalties for late filing and penalties for late payment of tax. By filing extension, at least you avoid late filing penalties.

In short, by filing extension, you can save yourself some money!

The third scenario is even more common -- you know you're getting a refund; you always get a refund. Maybe you're self-employed and your spouse has a W2 job, and spouse's tax withholdings are always enough to cover both of you. And you're in no hurry to get refund.

Which brings me to:

EXTENSION TIP #2:

If you are getting a refund on your personal return, you have 3 years to file return to claim refund, without any fear of a late filing penalty.

That's right. As long as you file your return within 3 years of original due date (for Year 2002 returns due April 15, 2003 -- that would be April 15, 2006), you'll get your refund and there is no penalty for "filing late" -- even if you file after extended due date of August 15.

Bottom line: if you think you may owe, if at all possible, do enough calculating to send in a payment with extension; if you're getting a refund, still send in extension (just to be safe), but relax, you've got plenty of time to get your money back (assuming you didn't need it yesterday!).

Oh, one more thing:

EXTENSION TIP #3:

This article only deals with federal extension rules. State rules vary considerably, so be sure to check with your state's tax department or your local tax professional to get scoop on extension rules for your particular state.

Some states simply piggyback off federal rules. Others don't. So be careful here or you could be penalized severely for assuming that your state's rules are same as feds.

Many Happy Returns!