Chet Osterhoudt

Chet Osterhoudt

Fundamentals lead to investing success

By Chet Osterhoudt
Business Columnist

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Many people look for the “secrets” to investment success. Is their “market timing” just right? Are they finding those “hot stocks”? Are they “getting in on the ground floor” of the next big thing?

Actually, these types of moves have little relevance to the vast majority of investors. Here’s why:

It’s time in the market instead of market timing – buying when the price is low and selling when the price is high. Some investors think they can succeed at doing so. That would indeed be a good strategy if they could predict highs and lows. No one accurately can forecast these peaks and valleys, though.

So, instead of ducking in and out of the market in a vain attempt to catch the highs and lows, simply stay invested. The more time you spend in the market, the lesser the impact you’re likely to feel from short-term price swings. And if you’re always invested, you’ll always be in a position to benefit from the next market rally.

  • It’s “buy and hold” instead of “buy and sell.” Even if you aren’t trying to time the market, you might be tempted to buy and sell frequently as you look for new and better opportunities. Yet, constant buying and selling can be costly. Frequent trading, with all the additions and subtractions from your portfolio, can make it hard for you to follow a consistent investment strategy. You’re better off purchasing quality investments and holding them for the long term, until either your needs change or the investments themselves no longer possess the same attributes they did when you purchased them.
  • It’s building a strong foundation instead of getting in on the ground floor. Many people regret not being one of the initial investors of a company that has done spectacularly well. But most new companies don’t achieve anywhere near that level of success.
  • It’s cool-headed thinking instead of chasing hot stocks. If you browse the Internet or watch one of the investment shows on cable television, you are bound to read or hear about hot stocks. But by the time the news reaches you, these stocks already might be cooling off. Instead of chasing hot stocks, coolly and dispassionately analyze your situation to determine which investments are really most appropriate for your goals.

This column was provided by Edward Jones for use by Chet Osterhoudt, an investment representative for Edward Jones in Nashville.