The Long Term Buy and Hold Strategy

If you think you can pick a few stocks that will significantly  outperform the market in the long run, open an account at a discount commission brokerage (Vanguard, Fidelity, Scottrade, E*Trade, etc).

Then start researching your potential picks. What you want to do is look up each company on Yahoo Finance, Seeking Alpha, The Motley Fool, CNBC, The Street, or another major financial site.  You can look up

Just so you know, there's a fair chance of a pullback in the market in the next few months.  Now is a good time to start finding good stocks. 

When you see the company's profile on Yahoo Finance, look at current and past earnings.  Look at free cashflow.  Note the dividend.  Read the 10K and 10Q reports.  Read the late  st news on each stock.

It's a good idea to run a stock screener, like the one Yahoo Finance offers.  With the screener, you can sort through all the stocks by a number of factors, including earnings, dividend yield and much more.

I wouldn't be afraid of newer companies.  I would research companies whose management are planning expansion (more stores, new products, expansion to foreign countries.)

If you need a couple ideas, consider PSMT and FB (Pricemart and Facebook).  There are lots of new interesting and profitable companies on the exchanges.  PSMT is touted as the Wal Mart of Latin America.  PSMT recently had a good run.  Then PSMT was downgraded.  But in the last week Pricemart shares have performed better.  PSMT I believe is a good long term hold.  But keep in mind Latin America markets are more volatile than the U.S., Western Europe, and Australia.

I like Facebook (FB) because it's #1 on Alexa and because the proceeds from the IPO are going to smart acquisitions, like Oculus.  Zuckerberg has said he wants FB to be what people use on Internet in the future.  My view is Facebook may someday own what comes after Facebook.

One thing to keep in mind is the markets are at an all time high.  Other things to keep in mind are the active Federal Reserve and an active government.  President Obama has said he wants to flatten out the economic cycles.  This could mean no gigantic pull backs (until a U.S. credit or dollar catastrophe...)

So learn the basics of options so you can hedge your bets.  One way to hedge your new stock purchase is to spend a little on a "protective put."  It's like insurance.

I am long FB and may be long PSMT in the next week.  I am also long GRZZX. 

If you're interested in what to do in an economic catastrophe, visit www.renegadeuniversity.net
Click on the "Crisis Investing" tab.   You may find the rest of my site interesting and useful too.

Have a good weekend.