Why ‘boring’ may be the best way to profit from investing

Julie Brownlee, Fsp Invest, 18 Jun. 2014

Tags: investors, investing, investing strategy, profit from investing, investments, twitter, profitable investment strategy



Quite often investors get too involved in the excitement of an investment prospect that it affects their judgement. And unfortunately this has a tendency to lead to future losses rather than future gains. So what can you do to try and avoid losing money on ‘exciting’ investments? Let’s take a closer look…



Twitter is a perfect example of an ‘exciting’ investment


This micro-blogger listed in a furore of excitement. Investors couldn’t wait to get a hold of their piece of Twitter. To say that many investors were excited about Twitter listing is an understatement.

But look what’s happened, Dr David Eifrig in Daily Wealth explains.

Since the start of 2014, shares in Twitter have lost 50% of their value! At the beginning of last month, the share plunged 17% in just ONE day.

Sceptic investors might say, well what is it that Twitter actually does? It doesn’t sell anything. All it does is provide a means for people to waste time.

Excited investors lined up to buy shares in Twitter, but these eager shareholders are now paying the price for it.


‘Boring’ shares lack excitement, but they’re solid investments


Whereas there are other stocks that may not appear as exciting to investors. In fact they’re quite boring in comparison.

But these stocks provide a service or product that is in demand. And their businesses produce vast quantities of cash over time and return this to their shareholders in the form of dividends.

Rather than trying to market a social media service, or something equally hard to value, there are ‘boring’ companies that provide products and services that are part of everyone’s daily lives.

All you need to do is filter out the real businesses from the risky ones. And that is easy to do. You just have to look for some signs that the share will deliver safe profits.

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This includes a company with a number of low factors, such as price earnings ratio, price to book ratio and price to sales ratio.

The lesson is clear. It’s easy to get sucked into a new exciting share, but good old boring cash producers can earn fantastic returns over the years and with less risk.

So there you have it, why ‘boring’ may be the best way to profit from investing.


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