More risk from stock advice newletters

In other posts I have talked about the risk of investing in stocks and urged diversifying into real estate or a side business. In that post on risk I showed a Table from AllFinancialMatters which proved the inherent risk of trying to pick a fund in any given year.

Now MyMoneyBlog points out the success rate of taking advice from financial newsletters. The short of it is that if you try to use the most successful newsletter from the previous year to pick stocks, your return will be negative.

This all proves that stocks are truly a Random Walk and investing in stocks for short term is akin to gambling. If you want to invest in the stock market (and I do), you must be patient and have a long time frame of at least 20 years. Don't bother to try to pick stocks - just buy an index fund that mimics the broad market and add money to it every month. Look at corrections as just an opportunity to buy at lower prices. But don't waste time obsessing about the market.

And diversify. Not just from your stock portfolio -but your job as well. Too many Americans put all their eggs in the job and stock market basket. But, that always gives reporters a sob story to wrote about when something changes - and it will.