Saturday, November 16, 2013

Classic Advice On Stock Investing

Have been going through some Spring cleaning otherwise known as Spring dumping and found an old investment magazine from 1997, 'Personal Investment: Shares, Your Next Move'. Good, solid financial advice is always going to remain current.

Here is one old, but good sixteen year old advice from the magazine:
"The market in 1987 proved that if you hang on it will come good. And if you can buy some good  blue-chip shares paying 5 to 7 percent dividends, that is still 1 to 3 percent more than cash management trusts. And if it's fully franked, it's a great alternative."
There are dividend yields for quality stocks roughly at that level again. The cash rate is roughly 1 to 3 percent below the dividend yields. It's as if sixteen years haven't passed.

Like most advice about trading, technical analysis on what to buy and sell, that stuff is not fundamental and has aged. The best strategy with regards to stock investing (if you are not that experienced) is just to buy the solid, blue chip companies that manufacture the everyday products that you use or the companies that provide the services that you use every single year.

Buy the ones that pay dividend so that you'll have income. Buying trendy growth stocks is highly risky, particularly when the company isn't profitable. I thoroughly dislike investing into IPOs for exploratory mining companies.

Liquidating stocks during financial crisis due to fear isn't the best strategy, especially if you've sold your stocks, ended up sitting on cash and didn't buy back into the market because you were waiting for the 'bottom'.

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