The financial news media cracks me up.

Back when they were 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 Sysco (NYSE:SYY), Staples (NASDAQ:SPLS), and Illinois Tool Works (NYSE:ITW) were trading for historically low earnings multiples. Others, such as Southwest Airlines (NYSE:LUV) and Verizon (NYSE:VZ), had been steadily growing operating earnings without seeing much of a correlating rise in stock price.

A reversion to the mean was coming, it was said, and large caps stood to profit the most.

Or it can get more complicated ...
Then there were the macroeconomic theories. If a recession was coming, investors would flock to quality companies and invest in large caps. Or if the dollar continued to weaken, investors would buy shares of companies that do significant business overseas -- such as Hewlett-Packard -- in order to see their earnings boosted when they repatriate profits.

Of course, there was a flip side to every one of these arguments. Take, for example, this post from The author posited that a weakening dollar would actually cause large caps to underperform! If the dollar continues to lose its value, foreign investors would 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.

So what's happened this year? Large caps have outperformed. But you can see when folks make sector calls, there's as much art (read: guesswork) to it as science.

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 a long 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 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.

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

Tim Hanson does not own shares of any company mentioned. Sysco is a Motley Fool Income Investor recommendation. The Motley Fool's disclosure policy wants you to let it know ... should it stay or should it go?

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.