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Investing for a Lifetime: Managing Wealth for the "New Normal" by Richard C. Marston

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CHAPTER 7 Investing in U.S. Stocks

In Chapter 1, I state that investing is easier than saving. That doesn’t mean that it is easy. Too many investors make investing hard by trying to be too smart for their own good. They choose the latest fad for their investments. Recently it has been popular to invest in gold, but no one wanted gold 12 years ago. In the late 1990s, it was high-tech stocks. Then six years later it was condos in Vegas or Miami.

Many investors don’t understand how important it is to diversify. This part of the book emphasizes diversification. But I promise that readers will also know a lot about each potential type of investment. None of these will be “the investment” to focus on. But all will be useful additions to an investor’s portfolio. We will begin with U.S. stocks.

In the “old days” wealthy investors might choose a handful of U.S. “blue-chip” stocks for their portfolios. That was all they needed because they were confident in the long-run viability of these blue-chip companies. In the 1960s, the list might have included AT&T, General Electric, and Procter & Gamble. But the list might have also included other companies in the Dow Jones Industrial Average like Eastman Kodak and Bethlehem Steel. In the 1990s, the list surely would have included Citigroup and General Electric, two companies run by star executives. What investor would not want to place a big bet on companies run by Sandy Weill and Jack Welch? In both periods, General Motors was also viewed ...

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