Please ensure Javascript is enabled for purposes of website accessibility

So Which Stocks Should I Buy Now?

By Tim Hanson – Updated Nov 14, 2016 at 11:52PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Do the opposite of what you read.

The financial news media cracks me up.

Back when everyone was making their 2007 prognostications, I read article after article citing all the reasons why large-cap stocks remain poised to make a market-crushing run. Some, such as Intel (NASDAQ:INTC) and Oracle (NASDAQ:ORCL), are trading for historically low earnings multiples. Others, such as Omnicom (NYSE:OMC) and Medtronic (NYSE:MDT), have been steadily growing earnings without seeing a correlating rise in stock price.

A reversion to the mean is coming, it's said, and large caps stand to profit the most.

Or it can get more complicated ...
Then there are the macroeconomic theories. If a recession is coming, investors will flock to quality companies and invest in large caps. Or if the dollar continues to weaken, investors will buy shares of companies that do significant business overseas -- such as Tyco (NYSE:TYC) -- in order to see their earnings boosted when they repatriate profits.

Of course, there's a flip side to every one of these arguments. Take, for example, this post from WSJ.com. The author submits that a weakening dollar will actually cause large caps to underperform! If the dollar continues to lose its value, foreign investors might take money out of the United States -- money that they tend to keep in less-risky large caps. Moreover, a weakening dollar could maintain the current low interest rate environment, making it easier for small companies to finance growth.

Does your head hurt? Yeah, mine, too.

What can experts really teach you?
See, experts can hem and haw about how X will affect Y unless Z is raised to the third power blah blah blah ... it doesn't matter. Just know that if you read the financial news, you'll get a lot of free advice. And remember that with free advice, you get what you pay for.

In other words, silence the noise.

Don't worry about macroeconomic theories or the prognostications of media experts.

Silence the noise.

Because if you do three things, you'll beat the market over decades and make a fortune from your compounding returns.

Your to-do list
What are those three things?

1. Buy great companies.

2. Hold them for long periods of time.

3. Continue to add new money to the market in good and bad times.

In essence, that's the most important investing lesson of all.

Fool's final word
The stocks you should buy now aren't large caps or small caps or mid-cap precious metals plays. They're the best companies you can find at the best prices. If you'd like some help finding companies that fit the bill, consider joining Motley Fool co-founders David and Tom Gardner at their Stock Advisor investing service. When seeking out great long-term investments, they look for:

1. Organizations built to last for the next 100 years.

2. Little-known companies that dominate relevant business niches.

3. The best companies in out-of-favor industries.

4. Management teams with great reputations, strong core values, and significant ownership stakes.

If that sounds like a methodology you can make sense of, click here to try Stock Advisor free for 30 days and see all of our research and recommendations. There's absolutely no obligation to subscribe.

This article was first published Dec. 22, 2006. It has been updated.

Tim Hanson does not own shares of any company mentioned. Intel and Tyco are Inside Value recommendations. The Motley Fool's disclosure policy wants you to let it know ... should it stay or should it go?

None

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Intel Corporation Stock Quote
Intel Corporation
INTC
$27.52 (-1.96%) $0.55
Oracle Corporation Stock Quote
Oracle Corporation
ORCL
$64.55 (-2.24%) $-1.48
Medtronic plc Stock Quote
Medtronic plc
MDT
$82.66 (-1.08%) $0.90
Tyco International plc Stock Quote
Tyco International plc
TYC
Omnicom Group Inc. Stock Quote
Omnicom Group Inc.
OMC
$63.24 (-1.39%) $0.89

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.