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“Never Buy Another Stock Again”: An Investing Guide for the Rest of Us

This article was posted on Jan 26, 2011 and is filed under Market News

With the Dow nearing 12,000, many would like you to believe it’s a stock-pickers market. But, if you ask Reuters market editor David Gaffen, he’d disagree.

Gaffen is the author of the new book for which the title says it all, “Never Buy Another Stock Again: The Investing Portfolio That Will Preserve Your Wealth and Your Sanity.”

There is a caveat. The anti-equity stance in the title of his book ONLY applies to a certain set of investors: the “more passive investor.”

In the accompanying clip, Gaffen describes his book as a guide for the investor that does not have the time to properly research and pick individual stocks. “I’m not saying don’t buy equities, but just stick with things like index funds [and ETFs]. Things that can help lower your costs.”

His point, not only is it too time consuming for individual investors to research individual stocks, investing fees are also costly and eat into returns. On top of that, if you don’t carefully monitor each and every stock in your portfolio, you could end up stuck in a stock that tanks.

Even for the best and brightest investors – includlng those whose manage money for a living – it’s not that easy, says Gaffen. He points to the most recent bear market where even some of the best fund managers lost a lot of money.

Bottom line: If you don’t have the time, diversify your portfolio with low-cost index funds and ETFs and rebalancing every six-to-12 months.

source: Business Standard

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