Recently, Kiplinger published an article looking at a successful market timer and contrasting it with a buy and hold strategy. Below are some key bullets from the article:
- Bob Parrish lost 70% of his retirement savings based on advice from a financial adviser
- Parrish fired his financial adviser and decided to try timing the market
- Parrish did quite well; his portfolio has gained an annualized 23%
- Market timing is a tough strategy and few do it well. Parrish admits, "I'm savvy enough to recognize I've been very fortunate and that it's not going to last."
- Mark Matson, a Cincinnati money manager, likens a market-timing strategy "playing Russian roulette"
- Successful market timing requires three key ingredients: a reliable signal, the ability to interpret the signal correctly and the discipline to act on it.
- Once you get into market timing, it changes from an investing game to an emotional game
- The Hulbert Financial Digest has tracked the performance of investing newsletters for almost 30 years. It identified only about two dozen portfolios that have beaten the market over the past 15 years.
Buy And Hold Dividend StocksPersonally, I prefer an investing strategy that requires less daily attention. As a long-term, value-based, dividend income investor, daily market gyrations are just irrelevant noise in the system. Below are five dividend stocks you can buy, hold and sleep at night:
- Abbott Laboratories (ABT) - Yield: 3.55% - Analysis
- Emerson Electric Co. (EMR) - Yield: 3.78% - Analysis
- Johnson & Johnson (JNJ) - Yield: 3.27% - Analysis
- 3M Co. (MMM) - Yield: 3.20% - Analysis
- United Technologies Corp. (UTX) - Yield: 2.80% - Analysis
Full Disclosure: Long ABT, EMR, JNJ, MMM, UTX. See a list of all my income holdings here.
Tags: [ABT] [EMR] [JNJ] [MMM] [UTX]