You can define stupid in a lot of ways: lacking normal intelligence, not clever, the opposite of smart. Dazed. Foolish. Irrational. Senseless Senseless. Doltish, dim-witted...

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You can define stupid in a lot of ways: lacking normal intelligence, not clever, the opposite of smart. Dazed. Foolish. Irrational. Senseless. Doltish, dim-witted, addlepated and obtuse.


For every definition, there are dozens of investments structured or managed in a way that fits the bill.


The one place where you don’t want to find those investments is in your portfolio.


That’s why seattletimes.com is bringing you my feature, the Stupid Investment of the Week, an educational effort that highlights the conditions and problems that make some investments far from ideal for the average consumer.


By spotlighting characteristics that make certain investments idiotic for ordinary folks, my hope is that it will be easier for you to find those flaws if they exist in your own holdings or in issues you are considering.


The “average consumer” part is critical to the analysis you will read here each week.


Average investors are not day traders, short-sellers or folks who eat, breathe and sleep the market.


Instead, they are people who may occasionally look at some charts or watch business television, who get tips and rumors from friends and neighbors and who hope — as we all do — that their next investment will be a big help in reaching their financial goals.


There are times when a hot stock might be perfect for a trader, but lousy for the average buy-and-hold guy.


It’s crucial that readers recognize that in calling an investment stupid I am not suggesting that people who have owned the investment for years or who bought in during a totally different period are dumb.


In mid-February, for example, Cyberzone was a pick for Stupid Investment of the Week (SIOTW), largely because — as operator of CyberBrew Net Cafes — it was being hyped in a telephone, fax and e-mail ad campaign as having potential to be the next Starbucks.


Investors who were familiar with the company had already been rewarded for their foresight, but the hype looked to be unsustainable. Once the pop from the quirky publicity campaign was done, trouble was brewing.


The stock has since lost more than three-quarters of its value.


SIOTW can focus on stocks, mutual funds, insurance policies or anything else that might be considered an investment.


I get many of my best ideas from readers, so don’t be shy about suggesting something you have seen or heard about. Better yet, if you are pitched an insurance policy, variable annuity or some other financial product that you think has stupid written all over it, send me the paperwork. My contact information is at the end of the column.


But even if I happen to pick an investment you own as Stupid Investment of the Week, keep in mind that this column is not designed as an automatic sell signal.


There are many times — usually for tax reasons, but sometimes due to surrender charges and other conditions or restrictions — when unloading a worrisome investment only compounds the problem.


While I don’t ever recommend throwing good money after bad, there are times when you are better off holding your nose and sticking it out than paying penalties or taxes to make a change.


There may also be times when I make a bad call on an investment. At least once every year, I’ll review my picks and call myself out for the lame ones; for 2005, you can look for that column in this space in just a couple of weeks.


In the time since this column started in March 2003, the characteristics that are routinely present in stupid investments have become increasingly obvious. Rather than picking on an individual investment as this feature kicks off on seattletimes.com, let’s look at those traits so that you can put them into your own “stupid detector.”


High costs.


The harder it is to make money after you pay the freight, the more likely you’ve got a poor investment choice. That’s not to say some mutual funds, insurance policies and other securities can’t overcome costs, but most don’t.


Mass-market products.


Some of the worst investment products are the ones priced for “average” customers. That includes most insurance plans sold on television, where a bare minimum of shopping around is almost always guaranteed to produce a superior result.


A never-give-up sales pitch.


The very first Stupid Investment of the Week was investment notes from American Business Financial Services, and those clowns continued to send invitations to invest every few weeks, right up until the firm filed for bankruptcy protection and suspended sales and redemptions for investors.


Likewise, if you request information on the Gerber Grow-Up Plan — a lousy life-insurance policy on children — or the AARP Guaranteed Acceptance Life Insurance plan (a bad idea for grown-ups), you may be in for mailers until your loved ones are collecting on your life insurance.


Irrational exuberance.


All too often, average investors only find out about an investment after it has come into vogue, by which time it may be ready to hit the skids. Some of the worst investment choices are the ones that appear to be can’t-miss opportunities.


Poor governance and questionable investment premises.


Sometimes, an investment stinks just because of the way it is constructed, the style of management or the ethics of the executives. These flaws aren’t always evident at the surface level, but once discovered they can quickly turn an investment that looks good into a whole peck of trouble.


Keep your eyes on this space in the future, and I’ll show you the tricks and traps of the investment world and how to sidestep them. It is hoped that you won’t just avoid the stinkers that make this column, but you won’t have anything like them.


Chuck Jaffe is senior columnist for MarketWatch. If you have a suggestion for Stupid Investment of the Week — or a comment about this week’s column — you can reach him at jaffe@marketwatch or Box 70, Cohasset, MA 02025-0070.