This chapter is from the book
This chapter is from the book
This chapter is from the book
Summary
At this point, you may be discouraged from the bad news I have given you so far. Don’t give up. The good news is that there are investment methods that do work and are not difficult to use. Before we get to them, you must first come to agree with several conclusions. First, the stock market is likely the best investment arena to outperform inflation as long as you safeguard yourself from large capital losses during market declines. Second, you know you have to make investment decisions for yourself because the investment management business makes more money from you than you do on your investments with them. Third, you are left with the decision to either ride the market’s ups and downs in a mutual fund or an ETF, or to select individual stock issues using a demonstrated analytical basis. I believe that the diversity provided with a mutual fund or ETF also inhibits your portfolio performance by spreading out the potential gain from individual winners: Your profit will approximate the average of all stocks in that basket, both good and bad, producing an average return. The buying and selling of individual stocks based on your own study and work has considerably more promise, and you can have fun doing it.