The Case for Stocks

Navigating through the investment world can be daunting to say the least. There are stocks, bonds, mutual funds and derivatives. One can invest in commodities such as oil, soybeans, gold and silver. Then there is real estate, rare coins and savings accounts. With all of these options, which one should a person choose? I choose stocks.

Why stocks? Because stocks provide the highest potential return for an investor. In the long-run stocks perform higher than other investments. As an example, lets look at the S&P 500 since the Great Recession. The S&P 500 is a stock index made up of 500 leading US companies. It is a diversified index and is seen as an index that best represents the US business environment. During the Great Recession, the S&P 500 fell to a low of $683.38. Today, the S&P 500 is at $1517.93. This is a 122% return! A person investing $1000 in March 2009 would have $2200 today.

There are many styles associated with choosing stocks. There is technical analysis, value investing, contrarian investing, large cap and small cap investing and growth investing. All of these styles I take into consideration, but if I had to choose a style of investing I would consider myself a value investor. I love to find a bargain. A company is on sale when their stock price is less than the true value of the company. I will discuss how to determine a company on sale in later blogs. The point is that you don’t want to lose your hard-earned money. As those savvy shoppers say, ‘never pay retail’.

I look forward to sharing with you my investment strategies and making them work for you. Happy Investing!

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