The best investment tip you will receive all year on choosing winning stocks: don’t try

If you want to be a successful investor, don’t try to pick winning stocks and even better don’t trade at all, says leading financial writers Henry Blodget and Felix Salmon in two separate columns.

The financial press covers the most consequential news of our times, where the money is going and what is being built, but it won’t help you make money.

“If you play that investment game, you’re almost certain to lose. And the sooner you understand that, the sooner you’ll be on your way to investing intelligently,” writes Blodget.

The reasons are many:

• You are playing against pros. As Henry Blodget says, a teams of amateur won’t win a football game against the Green Bay Packers or baseball game against the Yankees. The people who do this full-time have better tools, better training and deeper experience and resources. You will lose.
• Trying to time any market trends is futile since the market will always be ahead of you. The market will have priced that one extra piece of information that you didn’t consider. The financial press, for the most part, looks back.
• You can try, but you won’t be able to separate yourself emotionally from the boom and bust cycles of the market. Investors should buy low and sell high, but the hoopla in the financial press and eventual emotional involvement makes that difficult.

But that begs the question on where you should invest? The answer: diversified, low-fee index funds.

The answer may be boring—which may be the reason this advice doesn’t come up enough— but this investment method is touted as the best investment advice out there.

Warren Buffet, when asked for some general investment advice and how much Berkshire Hathway to buy, steered the person asking to look at low-cost index funds:

“I am only 99% Berkshire myself. I never go 100% myself,” said Buffet jokingly.

“If you buy equities across the board, which means an index fund, and you do it over time so you don’t put your money in at the wrong time, and it is a low cost index fund that’s probably the best investment most people can make.”

And if you really want to go hardcore, there is Mark Cuban, business magnate and owner of the Dallas Mavericks, who says just stay in cash.

The first step to getting rich is having cash available. You aren’t saving for retirement. You are saving for the moment you need cash. Buy and hold is a suckers game for you. This market is a perfect example. Right at the very moment when cash creates unbelievable opportunity, those who followed the buy and hold strategy have no cash. They cant or wont sell into markets this low, that kills the entire point of buy and hold.

Deploy your money in industries you know well, such as buying a business or investing in yourself.