I have written many articles citing the benefits of long term investing over short term investing. Beating the market over the short term is simply too difficult for most investors to do. It is close to impossible to time the market. Most long time traders only have minimal success at buying low and selling high over the course of a few days. Long term investing gives the average investor the opportunity to make solid profits and reduces the emotional stress of watching the market day to day.
The Dow Jones Industrial Average has surged past the 15,000 level and is even higher than it was before the economic collapse. Market highs are not nearly as tantalizing to the news media as market crashes. When the market was crashing, network news stations and political stations led their broadcasts off with the performance of the market. Fear leads to higher ratings for television news. Market crashes are much more exciting for networks than market tops. The market has rebounded mightily but has not received the same amount of coverage from the national news media. There are no primetime specials on the bounce back in stock prices. That is why I advise investors to avoid falling prey to their emotions when investing.
It is important to remember that slow and steady wins the race. Pay attention to the fundamentals when investing. It is far better to buy a company with solid fundamentals that has potential to reach its true value over a five year time period then to chase the latest and greatest investments trumpeted by Jim Cramer and other media types. Chasing growth over the short term is hard to do. Buying value over the long term is much easier.
Long-term readers have seen me trumpet the causes of Bank of America (BAC), General Electric (GE), and Ford since the market crash of 2009. I continue to believe that these companies have significant long term growth opportunities over the next few years. I have realized excellent gains in each of these stocks and continue to hold their shares. I continue to add these positions monthly.
I have recently started to pay attention to a few sectors that have fallen out of favor. In upcoming posts, I will be looking at the metals industry. There are a few companies that offer short term risks but have the potential for serious capital appreciation.