In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.
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Investors should approach all investments with a healthy sense of skepticism. This can help keep you out of fraudulent stocks that masquerade as high-quality stocks. It will also keep you out of legally operated, but poorly managed, companies that promise more than they can possibly deliver.
If you are a new investor, you should also realize that losing patience can cause you to sell your best choices right before a big rise. All too often, investors buy a promising stock just as it enters a period of price stagnation. Even the best-performing stocks run into these unpredictable phases from time to time. They move mainly sideways in a wide range for months or years before their next big rise begins. (Stock brokers often refer to these stocks as “dead money.”)
If you lack patience, you run a big risk of selling your best choices in the midst of one of these phases, prior to the next big move upward. If you lose patience and sell, you are particularly likely to do so in the low end of the trading range, when stock prices have weakened and confidence in the stock has waned.
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This latest round of rate cuts follows similar easing in September, and both rate decisions were aimed at promoting business and consumer borrowing. Any resulting increase in activity should help to protect employment levels and stimulate economic growth.
Generally, rate cuts tend to spur most economic sectors. In particular, they typically benefit Utilities and REITs. (See below for an Inner Circle question on Choice Properties Real Estate Investment Trust)
This portfolio is a good starting point for investors who need income. It’s also a starting point for conservative investors, since regular dividends are an indicator of investment quality.
Check our Ratings
All investors should invest mainly in stocks from our “Average” or higher TSINetwork Ratings.
Of course, we liked that it was a spinoff. Over the years, we’ve found that spinoffs are about as close as you can get to a sure thing in investing. Statistics show that after a company sets up one (or more) of its businesses as a separate entity and “spins it off,” the shares of both the parent and the spinoff generally do better than comparable firms for a number of years, if not decades.