The decided tendency of a vast majority of investors is to greatly understate sensitivity to risk. Most investors work off a “buy high, sell low” emotionally-charged template that is a bear to dismiss.
A number of hurdles must be conquered before a suitable goal-oriented investing plan can be put in place. Clearly, the subject of risk sensitivity must be addressed first, followed by some homework on portfolio activity, patience and compound interest. Once satisfactory common ground is achieved, it is time to determine targeted returns.
The first place you want to look when determining returns is the prevailing level of interest rates and dividend yields. Again, history clearly supports the wisdom of a diversified, balanced portfolio of stocks and bonds.
For all practical purposes, today’s interest rates are basically zero, and stock market yields are in the 2% range.
Indeed, the economy is in the winter stage of a business cycle recovery, and without the massive artificial stimulus in the form of Federal Reserve money printing, it would have already sunk back into recession. As we all have learned painfully through the years, recession is the bedfellow of falling stock prices.
In the current market conditions, I recommend the following five stocks to buy: