Weekend Edition – The Dual Approach Doesn’t Work


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As we look to invest in today's current environment, the opportunities to find quality income-producing assets has been increasingly difficult.

For those who are market averse, there aren't many good options left at all. The media keeps pushing a real estate rebound as a place to put your money, but finding an income-producing property with solid returns is much easier said than done. Unless you are willing to step up a pay a premium, hoping everything remains as solid as it has been, the opportunities for "deals" are usually reserved for the not-without-risk foreclosure market (which is even tough for those experienced to make some sound investment returns). Also, finding and keeping good tenants (both on the residential and commercial side) is never quite as easy as it sounds in those "get rich in real estate" courses. Turning to banking products like CD's and savings accounts, you would think the rates banks are paying out couldn't possibly get any lower, and yet each week they seem to drop even more.

As hated as the stock market has become for some folks, we still see some solid buying opportunities out there. Investors tend to run into trouble when they try to take a dual approach to the markets. People sometimes combine the slow and steady way of investing for compounding returns and income with the manic rapid-fire approach of getting in and out of stocks quickly (at the behest of the business media, of course). Mixing the two is something I am not a fan of, as the fear is any gains made on the manic side will eventually overshadow the slow and steady approach. One can easily say "I made a bunch of money in a short amount of time with stock ABC," thus making the more conservative stock XYZ look less attractive in comparison. Thus, people slowly but surely turn from investors into traders - and we all know the success rate for traders is incredibly low.

This transition happens each day in fact, as new investors take their place in the Wall Street poker room. You can sit for a long time and make quite a bit of money if you focus on waiting patiently for the right hand, but as is the case in most poker rooms, the lure of the "big pot" will cause some players to overstep, eventually emptying the chair for the next player. The new person who sits down must then decide whether they want to stick around a long time or be out of there as fast as the previous one was. Remember, you control the cards (stocks) you hold. Never let it be the other way around.

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We want to make sure everyone understands that the stocks on our Best Dividend Stocks List are the names we currently like for new investor capital, regardless of what date the stock was first recommended on. If and when a stock is removed from the list, we will clearly state whether the stock should be sold (which is rare but occasionally will happen), or simply held in one's account until we see a better entry point or catalyst.

And here's one last thing to remember about what we do here at Dividend.com. It's not just the names that we recommend that can help you build wealth, but also the things we try to steer you away from that are just as important. Forget about speculative or penny stocks, chasing unprofitable IPOs, and listening to the manic talking heads in the business media!

Thank you for sharing part of your weekend with me, and please be sure to pass this post on to anyone you think we can get inspired and educated about money, building wealth, and using common sense to do so.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Stocks

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