We noted with interest (and some amusement) the unveiling of the prototype of “The Rationalizer,” a new device that aims to sense day traders’ stress levels and alert them when it may be time to step back from trading. The idea is to ensure that traders avoid the mistake of trading based on emotion.

The device is made by Philips Electronics (symbol PHG on New York), one of the blue chip stocks we’ve taken a close look at in the most recent issue of Wall Street Stock Forecaster (see below for a full update on this Netherlands-based electronics firm). The Dialogues Incubator, an initiative of Dutch bank ABN AMRO, also played a role in its design.

Users of the device wear an “Emo Bracelet,” which senses a trader’s stress level and makes the accompanying EmoBowl, which sits on the traders’ desk, change from yellow to red as the trader becomes more stressed.

Buying and holding for long periods beats short-term approaches — and keeps your stress level low

We think that, at best, this device will slow down the rate at which most non-professional day traders lose money. That’s because, emotion aside, there’s a large random element in short-term stock-market fluctuations.

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It’s possible for some short-term trading newcomers to make stock market picks that do surprisingly well at first. Eventually, though, the odds catch up with them. That’s why most short-term traders wind up losing money. By the time their beginners’ luck fades, many are trading in dangerously large quantities.

Instead of short-term or day trading (with or without the help of gadgets like the Rationalizer), we continue to advise you to invest in such a way that the random fluctuations even out over long periods. That way, you profit from the near-inevitable long-term rise in the value of high-quality companies.

This is the approach we follow when we recommend stocks in our investment services, including Wall Street Stock Forecaster, our newsletter that focuses on the U.S. stock markets. In the latest issue, we’ve updated our buy/sell/hold advice on Philips Electronics.

Philips: One of the blue chip stocks that’s well positioned for a rebound

Philips goes far beyond concepts like the Rationalizer; this blue chip stock’s products include a wide range of consumer electronics, such as TV sets, DVD players and kitchen appliances. It also makes lighting and medical equipment.

The weak economy has weighed on Philips’ results lately, but the company is doing a good job of controlling its costs, mainly by cutting the size of its workforce. Philips has an ambitious plan to lower its annual costs by 600 million euros ($951 million Canadian). That puts the company in a good position to profit as the global economy recovers.

You can get our latest buy/sell/hold advice on Philips in the current issue of Wall Street Stock Forecaster. Click here to learn how you can get one month free when you subscribe today.