Last week, I extolled the virtue of laziness and tried to lay the groundwork for a system of strategic sloth. Simply put, I think that by considering your finances in terms of personal labor units instead of dollars, you can save yourself thousands of hours of nasty, tedious work and have more time to enjoy life.

I think most of us could also profit from taking a similar approach to our investing. You may be thinking, "Yeah, yeah, Mr. Smarty-pants. They've already got a system for that. It's called a mutual fund."

I'll admit, at first glance, the method that seems to require the least time would be to drop your money into an index fund and let it fester until you retire. This is, in fact, a policy we've advocated here at the Fool for quite some time. You could also try to find some of the few mutual funds that manage to outperform the indexes, and our own Shannon Zimmerman would be happy to help with that.

Lazier than a mutual fund
But, in the end, I don't believe that a fund-only policy is really the biggest work saver. We can be lazier than that, but it will take a little work.

What's this kooky talk about working more to work less? Remember our overarching principle: Strategic sloth means measuring our lives by individual labor units and working as little as possible to live as richly as possible.

Like most other Fools, I am convinced that with a modicum of effort, anyone can pick stocks that will outperform the historical 10.2% average annual return of the S&P 500. If you can gain even a single percentage point on the index, it can make an amazing difference over your investment career.

For instance, if you have $10,000 to invest now and put away only $300 per month for 30 years, at 10.2%, you end up with $799,328. If you gain only a single percentage point on the average, you would end up with $986,138, a difference of $186,810. I don't know what you earn, but that money would represent over three years' worth of wages for me. I'd much rather give up a couple of weekends a year poring over moldy old stock reports than put another 45 months at the daily grind.

But, as I said last week, stock picking isn't brain surgery. You don't have to invest in the so-called blue chips, many of which are so dizzying in their diversity that not even Wall Street's full-time analysts can figure them out. Instead, I invest by a few simple rules that I'm calling the "Lazy Six." Let's review them in a bit more depth than last week.

The Lazy Six
1. Keep it simple. Ideally, the business should do only one or two things. Simplicity makes it far less likely that we will miss something important when we read the financial filings.

What? Read through the filings? Sorry to burst your bubble, but you will have to keep on top of company performance. Remember, we are practicing the art of strategic sloth. It does us no good to save a few hours' work each year by avoiding our stock research only to have to head to the office for a few months' labor to earn enough money to recoup losses incurred because we weren't paying attention when our widget maker decided to start trading derivatives.

2. Beware the business cycle. We do not want to have to worry about cyclical industries or macroeconomic conditions.

Some people make a great deal of money -- or at least claim to -- by buying up industries like car makers, steel producers, chip makers, and others when the economy goes soft, then dumping them when they crest the wave at the beginning of the next economic upturn. Not only is this a tough job, it takes a lot of work.

3. Invest in leaders. It is easier to assess the competition from the front of the pack than from the middle.

I think it's easier to assess the performance of a leading firm than judge the prospects of an also-ran. Leaders are better able to beat on their competition when the need arises, and the game is theirs to lose. Look at it like betting on a basketball game during the third quarter, when you already know the score. If one team is up by 22, you know where to place your chips.

4. Seek honest, minimalist management. Look for companies run by a team that explains things clearly and briefly.

I'll admit, judging management honesty isn't always so simple. It's not as if the crooks out there come with black masks, striped jumpsuits, and carry sacks with dollar signs on them. But you can tell a lot about the firm by reading an annual report or two, readily available at the SEC's EDGAR website. If management can't explain the business in plain English, move on to another firm. If you see phrases like "creating knowledge-based value in emerging markets" (an Enron special), someone is trying to pull the wool over your eyes, you lazy Fool. Run.

5. Forget the chart watching. We do not follow technical trends, nor do we trade.

I don't know about you, but I always assume there's somebody out there who's smarter, or at least sleazier, than I am, and that's the slickster who's going to get the better end of a trade. Lazy investors don't want to think about their stocks more than a few times a year, nor do they want to work to pay all those extra fees and taxes. So turn off the streamer and enjoy life.

6. Don't over diversify. Lots o' stocks means lots o' work.

Warren Buffett had his famous 20-punch card. His point was that there aren't too many really great investment ideas. He may be right about that. But even if he's not, and there are more ideas than we think, the lazy stock picker must ask herself, "How many investment ideas can I find?" and "How many stocks can I track?"

There are folks around these parts -- OK, the Fool boards -- who would never put more than 2% of their assets in a single company. That means they need to have 50 good stock ideas! (Groan.) My laziness starts to feel strained at a dozen. I'm comfortable with that because I'm not afraid to take "oversized" positions in companies I really believe in. But for those who need the comfort of diversification, I suggest reviewing the paragraphs above regarding index funds. This yields a portfolio Matt Richey called the Index Plus a Few.

Six stocks for the lazy
Without further ado, I offer six examples of stocks that fit into my criteria for the lazy investor. Some of these come from my own portfolio, and some are stocks I only wish I owned.

Why did we have to wait for Starbucks (NASDAQ:SBUX)? What could be simpler than a cup of coffee? Not much, yet for decades we coffee lovers had to search for a decent cup of java. Amazingly, it took until last decade for a company to really get the coffee business right. As a result, Starbucks is a name synonymous with its product. And despite its huge run -- Starbucks has returned almost 40 times its split-adjusted IPO price of a buck per share -- it keeps serving up fresh, hot profits.

Fool founders Tom and David Gardner recently spoke with Chairman Howard Schultz about Starbucks' latest earnings, which were up 50% year over year, with an incredible 10% gain in same-store sales. Management thinks there is still plenty of room to grow, and I tend to agree. This is a stock that Rip Van Winkle would adore.

FARO Technologies (NASDAQ:FARO) is the littlest firm in the bunch and one of my personal favorites. It makes high-precision measuring devices and software that automate engineering, design, and quality control for manufacturing businesses of all kinds. That sounds complex, and the products themselves are, but the business is simple: offer industries a way to make things more quickly, more accurately, and less expensively.

FARO's been a two-time Motley Fool Hidden Gems pick, but it's not a stock for the faint of heart. However, given its leadership position in the field (it claims around 40% of the market) and the high likelihood that this technology will become standard for all manufacturers during the next decade, this is another stock that should do fine if tucked under the pillow for a few years.

Avon Products (NYSE:AVP) has caught many investors' attention lately. It follows the familiar business model of personal service through the Avon Lady and, in spite of the seemingly old-fashioned distribution network, the firm is ramping up sales, especially overseas.

Recent revenues and profits have been putting so-called competitors to shame, and the company also signed cross-cultural glamour gal Salma Hayek to help peddle its products. No one else in the industry does what Avon does, and no one's got the results, either.

SanDisk (NASDAQ:SNDK) is another volatile stock, but the company looks rock-solid simple. It's the leader in flash memory, those little chips found in everything from digital cameras to cell phones and MP3 players. Even if your memory chip comes from another producer, chances are SanDisk got a cut of the profit, because it licenses much of its intellectual property to others.

As with FARO, this is a calculated bet on the future. With ever-increasing memory requirements for new gadgets, SanDisk stands in the best position to profit from this established technology trend.

I had some tough words for Reebok International (NYSE:RBK) after last month's less-than-stellar earnings report. But I continue to believe the company has a great chance to outperform its larger rivals because of its effective specialization.

Reebok's newfound focus is in two areas: high-performance athletic shoes and more fashionable sneakers, including retro kicks hawked by Shakira, and hip-hop styles fronted by the likes of 50 Cent and Jay-Z. To judge by P/E and growth prospects, Reebok looks like the best value among its peers in the shoe world, and it's probably the best value on this page as well.

World Wrestling Entertainment (NYSE:WWE) may have the simplest -- and most simplistic -- business model here. What's not to like about a company that fills stadiums with fans screaming to watch men in tights bash each other with folding chairs? This firm is a real alchemist, turning base materials into gold every day.

It earns major green from its area and pay-per-view events, plus plenty of extra on licensed videos, T-shirts, and souvenirs. True, sales have flattened out lately, but McMahon and company find ways to make a buck anyway.

The lazy bottom line
Whew. After all that, I'm just about ready for a nap. But Foolish protocol demands some kind of conclusion, so here it is, folks: Harness the power of laziness. That's right, revel in indolence. Just do it right.

Strategic sloth often means doing a bit more work now in order to spare yourself in the future. By picking stocks in companies that are focused on simple business plans and are established leaders, you greatly increase your chances of outperforming the averages while you reduce your investing homework. I'm confident this can make you both wealthy and happy. And what's more important than that?

A few years down the road, I look forward to seeing you swinging in the hammock next to mine.

Got a hankering for more small-cap gems that Wall Street has yet to uncover? Take a 30-day free trial of Motley Fool Hidden Gems here.

Fool contributor Seth Jayson owns shares of FARO and SanDisk. View his Fool profile here. The Motley Fool is investors writing for investors.