If there really was a magical genie in a bottle who could grant me one wish, I would wish for a two year subscription to Barron’s weekly magazine … with each issue delivered one week before publication. Every week it seems, selected stocks fluctuate wildly in their trading price, usually in response to some unexpected news tidbit. I figure I could make a few zillion dollars knowing this information in advance. Then I could focus on more important things … like fishing.

Wouldn’t it be great if someone could offer the answer to the question “What is the Best Investment?” So many try. The library and book stores are packed with publications and newsletters offering the reader “their take” on the latest and the greatest … momentum investing, charts, graphs, penny stocks, pork bellies straddles, insider trading, value and growth investing … the list is long. Many of these systems actually work … but not consistently. More often they are a fluke or a fad that provides the publisher a window of opportunity to profit from a particular philosophical bent.

I know that I have personally lost a lot of money in my pursuit of the magic answer. One thing I’ve learned for certain … no one knows the future, no one. Therefore, all recommendations are guesswork. The trick is to follow the educated guesses and ignore the gimmicks and schemes. Arranging one’s portfolio based on which football league won the super bowl is my definition of crazy. Yet, some prognosticators actually advocate such a scheme. Presidential elections are another. Dogs on the Dow another. All seemingly substitutes for rationality.

Everyone though needs a system, some plan for accumulating and preserving wealth with investments. That focus could be on a business you own, or from real estate investing. For many of us however, the focus is investing dollars in our retirement plan.

Charles Carlson, the author of Eight Steps to Seven Figures is a familiar name in investment circles. He’s authored several books and is well known for popularizing DRIP investing (Dividend ReInvestment Programs). In this book, he offers his system for wealth accumulation: buy quality stocks long term. Don’t worry about timing or market fluctuation, and ignore all the hype.

At the end of each chapter, he provides an interview with a different millionaire investor. There is a series of standard questions designed to profile the investor and to spell out their individual beliefs, philosophy and methodology for acquiring wealth. I was struck by the fact that these investors were all rather ordinary folks who followed a very similar, and let me add simple path, over a long time period. Their occupations included probation officer, sales, insurance agent, journalist, lawyer and software developer.

Here is a quote taken directly from the chapter called “Buy and Hold … and Hold” which I think expresses the real substance of this book. “Buying and holding a quality stock for five or ten or twenty years isn’t sexy. It won’t give you great stories to tell around the water cooler. It certainly won’t make your broker happy, but it will make you rich.” Each of his interviews confirms this to be fact.

This is a system; one I believe works very well. It is of course imperative that any investor following such a program diversifies investments among a variety of choices. If you’ve followed the “Enron debacle” in the press, then you know well the dangers of too much concentration in too few investments.

The author names many names of potential investments, companies which would be familiar to many, names like Disney, Wal*Mart and Coca Cola. There are also a few names I’m certain he wishes now he hadn’t named … but such is the reason for being well diversified.

I really enjoyed this book because it makes sense to me and the outcome really cannot be disputed, at least, not in hindsight. Will the investment playing field now change so radically as to nullify the principles set forth in this book? I think not … but remember that’s a guess. If you think today is different than the past 100 plus years, then perhaps you should buy gold and bury it in the backyard. If instead, you prefer to be where the action is and invest in cutting edge technology-type of securities, this book will disappoint.

But if you prefer to spend your time pursuing other interests (fishing?) over studying all matter of investment theory, this book may be your key to the simplicity so many desire. I particularly recommend it to people who have 15 or more years before retirement, and to older folks who have established a solid accumulation and desire to put their portfolio on a more stable footing.

Reaching your financial freedom day is not about becoming rich or building empires. Yet accumulating sufficient wealth to carry you the rest of your life is an essential tool in that reach. So long as you are required to have employment to maintain, how can you ever be free to discover and enjoy the real you?

© 2001 Stephen Heavey, All Rights Reserved