What Investments Should You Choose Right Now?

What Investments Should
You Choose Right Now?
By www.ProfitableInvestingTips.com

http://profitableinvestingtips.com/bond-investing/what-investments-should-you-choose-right-now
There is always a risk in giving or
receiving investment advice.

Many times do we read that an
expert is making suggestions
based on “what their charts show.”

There may be useful information in
their research but there is also a
huge fudge factor.

This is because the “expert” is not
really giving you specific advice
but only relaying what their “chart”
might be predicting.

Meanwhile, as the market is
heading downward every day, you
are wondering this, what
investments should you choose
right now?

General versus Specific
Investment Advice

General investment advice, when
it as some value, is based on past
performance.

For example, money invested in
the US stock market and left there
over time tends to out-perform
other investments such as bonds,
real estate or bank deposits.

So, is it good general advice to
invest in stocks?

Yes, it is. But, in order to correctly
follow this advice you need put
money in an index fund that
follows the S&P 500 or perhaps
the Dow Jones Industrial Average.

And, you need to leave it there
through good years and bad.

This is because individual
investors are typically not very
good at timing the market.

An interesting article in The
Balance shows us 20 years of
stock market returns by year.

Negative stock market returns
occur, on average, about one out
of every four years.

Historical data shows that the
positive years far outweigh the
negative years.

The average annualized return of
the S&P 500 Index was about
11.69 percent from 1973 to 2016.

In any given year, the actual return
you earn may be quite different
than the average return, which
averages out several years’ worth
of performance.

To benefit from the long term
growth of US stocks you need to
stay in the market for at least five
or ten years.

This is how many years you need
to stay with an investment to
make it long term.

So, what investments should you
choose right now based on this
advice?

You should pick a broad-based
index fund that follows the S&P
500 or Dow, add to your
investment on a continuing basis
and stay with the investment
through thick and thin.

Based on past experience, your
investment will out-perform others
over the years.

What Investments Should
You Choose Right Now to
Avoid Losing Money?

Maybe the thought of watching
your investments fall in value by
another twenty or thirty percent is
a bit too much.

And, maybe you are not so sure
that the market will come back
very fast once it gets done
correcting.

If this is the case, you are looking
for ways to invest without losing
any money.

Bank deposits are protected by
Federal Deposit Insurance.

US Treasury bonds, notes, and
bills when help to maturity will
return you investment plus
interest.

Likewise, AAA and AA bonds are
good ways to invest and protect
your capital.

However, none of these
investment options compares in
return over the years with the US
stock market and well-chosen
stocks.

Choosing Specific
Investments Right Now

An ETF that tracks the S&P 500
will provide a good rate of return
when held for five, ten, or more
years.

But, there are stocks that will
outperform the rest.

How to you choose them? The key
is to apply the concept of intrinsic
stock value.

Successful investors who apply
this approach are always looking
for profitable stocks to invest in.

They look for companies whose
business models are clear and
likely to provide good returns over
the coming years.

These investors do not necessarily
buy those stocks right away.

Rather they wait for a stock market
correction.

The company they have chosen
already has an intrinsic value
greater than the market price of
the stock.

Then, with the correction, the stock
becomes more of a bargain.

A solid long term investor will
typically have several promising
stocks on his buy list.

But, he or she will only purchase
those stocks when the current
price is substantially less than the
intrinsic value price.

Then the newly purchased stock
provides a forward-looking income
stream and profits for years and
years.

Specific Stocks
Suggested by “Experts”

Forbes has an article suggesting
that you “hold your nose” and buy
US stocks.

They allude to the futility of trying
to time the market and the value of
long term investing.

If your investment horizon is over
two years for investing your
money, don’t sell!

You will just set yourself up for the
impossible task of winning a
market timing contest, and
realizing losses.

History demonstrates that it’s
better to stay in the game so you
don’t miss the short periods when
stocks sharply recover.

The specific stocks suggested in
this article are not the high tech
darlings that are household
names.

Rather they are companies that
routinely make money and are
somewhat undervalued compared
to their current market price.

United Rentals: down 40% this
year
People’s United Financial: Down
16% this year

These may be good suggestions
but we strongly advise that rather
than acting on these stock tips that
you carry out your
own fundamental analysis before
buying and holding for the long
term.

Are There Stocks You
Should Sell Right Now?

This gets us back to intrinsic value
as a guide to stock investing.

There are stocks with great names
and traditions that are no longer
stellar long term investments.

Kodak was a prime example. They
invented the personal camera,
camera film, and commercial film
developing.

For much of the 20th century
dominated the market and then
digital cameras came along and
Kodak’s business model no longer
worked.

IBM was the king of big central
computers and took a big hit from
the invention of the PC and faster
chips.

IBM was able to transition into
other parts of the computer world
but they are no longer the
company whose stock you should
never sell.

Whether the market is going up or
going down, when you have a
company whose business plan no
longer works and whose stock
value is being propped up b stock
buybacks, you should probably sell
and avoid future pain as the stock
slides into oblivion.

What Investments Should You Choose Right Now?

Recommandé

Recommandé

Contenu connexe

Plus de InvestingTips

Plus de InvestingTips (20)

Dernier

Dernier (20)

What Investments Should You Choose Right Now?