Best Stock Investment Today's Stock Market
For about 98% of people, the best stock investment in the stock market is not Google or Apple's 2011 and the future. In fact, your best stock investment is not a single company investment. Here's how to avoid having the right company at the wrong time.
There is something called "specific risk" that has been part of the investment world since the start of the organized market; and will remain in 2011, 2012, and the future. The average investor's risk of finding the best equity investment is easy to avoid, so let me describe it by way of example. This year is 2011, you're hot on the stock market and are good for big growth and technology companies. You buy the stocks that you think are the best in the industry.
After some time, there are good news and bad news. The market soared, led by the growth and technology sectors. The bad news: your company came out of bad news, the stock fell out of bed. If you hit the market long enough, this will happen to you. In the above example, you are basically the best investment for 2011. You are too greedy too SPECIFIC. Let's see what you can do differently, not lose money.
Large Growth and Technology Stock Investment Barometer or Benchmark is the NASDAQ-100 Index, which tracks the 100 largest non-financial securities traded on the giant Nasdaq Stock Market. This market deals with the New York Stock Exchange and Google, Apple, Microsoft and many other big companies at NASDQ ("Naz dack"). Your best stock investment in 2011 will be an exchange traded fund that simply tracks the NASDAQ 100 index, the stock code QQQQ. In this way, you will automatically include three great companies plus 97 others in your portfolio.
The picture was canceled by owning a specific part of an exchange-traded fund rather than a single company. There are hundreds of different funds to choose from, many of which are equity investments. For example, the symbol SPY tracks the S & P 500 Index, which includes most of the big US real companies. If you are interested in gold or silver, the best investment may be GLD or SLV, or you can trade trading funds. All of them are traded on major exchanges, just like Apple, Intel and IBM.
The best stock investment for the market average investor in 2011 and beyond is in the form of index funds. If you do not want to invest in the stock market itself, your best bet would be in common forms of mutual funds, especially the stock INDEX variety. Either way, you can mitigate risk and cost by having a portion of a diversified portfolio.