We all have seen the long term charts showing the returns generated by the various asset classes. Despite the increase in volatility that is associated by investing in the stock market, the excess returns over the cash and bond markets are still not enough for some investors to get them to increase their allocation to stocks. Old wounds from the Great Depression kept an entire generation for decades from ever investing in the stock market. Recent experiences of two generational bear market in one decade has now scared another generation away. Sadly, trillions of dollars continues to sit in the bank at sub 1% returns while corporate profits are at all-time highs.

“Is it the right time to invest in the stock market?” That is a question many are now asking themselves. Nobody really knows the future. Maybe it is not the best day to invest… maybe it is a great time! Maybe it is time to think about it another way…If you invested the day before the Great Recession of 2007-9 hit, if you just invested in the average index funds, your average annual return since then would be over 7%! That is after the market lost a full 50% of its value and the subsequent “anemic economic recovery” we continue to hear about. I think that is a whole lot better than the sub 1% you would have received by playing it safe, as long as you could accept the volatility and simply stay the course.

In my last book, The Magnet® Method of Investing, I suggest that for many investors simply taking the alternative of using low cost index equity funds is better than avoiding the stock market altogether. Of course I believe there is an even more profitable way to invest your money- and that is to identify the best companies and target your investments into owning stock in those companies. I have spent the better part of 30 years trying to develop a model that isolates the best companies to invest in. I call these “Magnet Stocks”. By interviewing the top manager managers, newsletter writers, and authors over the last several decades, 19 variables have been methodically tested and then selected for use in The Magnet® Stock Selection Process. I personally want more than an average return from the money I put to work in the stock market. I want to invest in the few companies that rank up best through my blend of value, growth, and momentum variables.

I will share a few ideas that currently are ranking out highest in The Magnet Model, but none of them are recommendations for you. Every investor has their own risk tolerances and that needs to be considered prior to investing. Professional money management - position sizing, the use of stop-losses, and adding to winners during low volume pullbacks are also keys to profitable investing. I also want to point out that I am not an “analyst”. Instead, I am a professional portfolio manager that uses my own methodology to invest for myself and my clients. An average return over the years in the stock market is better than sitting in cash- but this student of the market wants to be a winner.