How do you go about picking the best stock investments? Should you be looking offshore? Is buy and hold the best strategy? Is short term investing a better approach? Are individual stocks the best approach or exchange traded funds? What part does analysis of the economy play in picking the best stock investments? When is it time to ignore fundamentals and simply take a technical approach? Here are a few of our thoughts past and present on picking the best stock investments.
Getting Your Money’s Worth
Four years ago we wrote an article, What Is the Best Investment for My Money? Asking this question leads the investor to develop criteria by which to judge the success of investments. Asset growth, security of assets, opportunity for large gains, and more are good criteria for judging investments. Picking the best stock investments will be different if you are just starting out and have a lifetime of work earnings ahead of you than if you are ready to retire and live on your savings and investments. Basically the degree of risk in your portfolio should decrease over the years and as retirement approaches. Portfolio diversification is important but the first and best investment is probably a place to live. Before investing in gold, investing in Russia and its oil resources, or investing in growing companies in Asia or Latin America the investor needs a solid base and that comes from home (or apartment or condo) ownership as your first choice.
Today’s Best Investment Opportunities
Three years ago we wrote about the best stock investments in a declining market. Some of the advice from that time may be appropriate today if the market moves into a big correction. Dividend stocks can be especially attractive when purchased at a discount in a weak market. Stocks like Johnson & Johnson – JNJ, which has paid quarterly dividends without fail for half a century, are perennial cash cows. Selling everything from first aid salves to sophisticated medical devices the company is well diversified with a global presence. Proctor & Gamble – PG, is synonymous with consumer products and is generally considered one of the world’s best run companies. The company sells its products in every corner of the earth. Many would also consider this stalwart one of the best stock investments in a declining market.
Picking the Best Investments for the Long Term
If you want to pick the best investments over the long haul follow the advice of those who have done so with spectacular success for decades. Here we are talking about the likes of Warren Buffett. Basic to Buffett’s success is that he only invests in companies where he understands how they make their money and how they will continue to do so far into the future. He avoids tech stocks as being too hard to analyze over the long term. Buffett’s top three dividend paying stocks for 2014 are General Motors, Proctor & Gamble and Exxon. To the degree that you can see the future you will buy the next Microsoft the day it goes public and the next Apple the day that Steve Jobs comes back. But it picking stocks it is important not to jump around too much and lose money. In fact Buffett’s first two rules of investing are 1) do not lose money and 2) remember rule one!