Three "Easy Hold" Stocks

Investors should avoid "emotions" and instead focus on long-term, periodic accumulation, advises Chuck Carlson. Here, the editor of DRIP Investor explains his strategy and highlights a trio of "easy holds" for long-term investors.

Steve Halpern: Joining us today is incoming dividend expert Chuck Carlson, editor of DRIP Investor. How are you doing today, Chuck?

Chuck Carlson: I'm fine, Steve. How are you?

Steve Halpern: Very good. Thanks for joining us. Now, you're a leading proponent of dividend reinvestment programs, a strategy that forces investors to continually add to their positions, despite market volatility. You point out in your latest research that a big benefit of this strategy is that it eliminates emotions from the investing equation. Could you expand on that?

Chuck Carlson: Sure. As most investors know, typically, it's hard to separate the emotional side of the human being with, kind of, the intellectual side, and this really hits hard in investments. Typically, in investing, emotions won't make you do exactly the opposite of what you should be doing if you're a long-term investor.

For example, as markets decline, as they did in 2008-2009, logically, market declines—especially as severe as we had—reduce stocks to pretty attractive levels if you're a long-term investor. Unfortunately, most people do exactly the opposite. They don't buy at that time, and, in fact, they sell.

That's why dividend reinvestment plans, I think, one of the real values of those is that they strip emotion from the process, and they literally force you to be buying stock at times when your emotions would not let you.

And ultimately, as any long-term investor can tell you, the way you can really build wealth over time is taking advantages of those declines in the market to buy stocks, because stocks typically recover and we've seen recovery, pretty much, always, since the early 1900s.

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What dividend reinvestment plans do is basically reinforce that ability of getting you into the market to buy stocks during market periods when you're unlikely to do that on your own volition.

Steve Halpern: With the dividend reinvestment program, you would continue to add to those positions if the market is going up, as well as when it's going down.

Chuck Carlson: Exactly! I mean, you're putting money into the market on a regular basis, and yeah, on a short-term basis, some of the money you put in may appear to be at "a market peak," but again, as you look over time, what you're doing, basically, is taking advantage of the market's long-term upward trend.

Most people get so focused on short-term market trends, they really, kind of, miss the forest for the trees, and the reality is, if you go back since 1926, basically, two-thirds of the years, two out of every three years, the market is up.

The way you take advantage of that upward market is putting money into the market on a regular basis and especially putting it in when the market does lose periodic pullbacks.

Steve Halpern: To focus on this type of long-term accumulation strategy, you prefer stocks that you consider all weather stocks, in fact, your latest research report is called "easy holds." How do you go about finding stocks that meet that criteria?

Page 1 | Page 2 | Next Page The expert featured in this column, Charles Carlson, may or may not own positions in any investment vehicle mentioned here. The views and opinions expressed are his or her own.