Increase Your Returns By Stepping Way Back

Since August 24, the day the market dropped 1,000 points in five minutes, stocks have been treating us to daily thrills and chills.

And, if you have been following these almost constant ups and downs in your portfolio, you – and a whole lot of folks like you – have by now gotten that sick, awful feeling that comes with sell-offs.

Now, I could spend the next 800 words telling you sell-offs are expected and should be planned for, especially after the multiyear run-up we have been in since 2009. But instead, I’m going to share a technique that requires almost nothing on your part, but is proven to make you money. Stay with me…

We all know that, in investing, you have to ride out the rough spots to get to the good stuff…

I could show you all kinds of charts about how the market always runs up to new highs after down periods like this year’s.

But my decades in the financial advice and money management business tell me it won’t make any difference.

Once the market starts doing its numerical gymnastics – and it has been cartwheeling all over the street – there seems to be no power in the world that will keep the average investor in his investments. The fear of losing any more of his nest egg is too great and he will sell at a loss… again.

The Importance of Quality

Before I share this moneymaking technique that requires doing almost nothing, there is one big caveat you must understand.

To make this work, you must own quality: companies that have long histories of increasing their earnings, revenues and dividends. Those will allow you to focus on the long haul and do something other than worry.

 

As a retired person, as someone planning to retire or as an income investor, this idea of quality should be obvious. You can’t get to retirement – or through it – by owning high-risk or even medium-risk stuff. Our days of speculative biotech investments, penny stocks and hunches are over. (At least I hope you know they’re over.)

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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