How to Pick Stocks for Slackers

You too can be a Fat Cat.

There's nothing wrong with wanting to make money without really trying; if you're a slacker, but you want to invest in the stock market, you can do so without expending much effort by using a low maintenance investment strategy. Instead of watching the markets every day, invest in long-term stocks with a potential for growth.

Instructions

1. Pick a diverse set of stocks. Harry Domash of MSN Money recommends that you not have more than 20 percent of your stocks in any particular industry or geographic area. Following this rule will help you to avoid severe losses in the case of a major bubble burst, such as the dot-com bubble experienced in the early 2000s.

2. Follow the recomendations of investment analysts. Analysts rate stocks ranging from "buy" to "hold" and "sell." These assessments are based on market expectations. A stock that is rate as "sell" is expected to perform poorly; one rated as "buy" is expected to offer growth; while a stock rated as "hold" is not worth buying, but is worth keeping if you have it in your portfolio.

3. Buy stocks of significant value. It may be tempting to buy cheap stocks with the hope that they will soar in value -- and this does happen sometimes -- but it is more likely that these stocks will be underperformers; their low price indicates that investors see potential problems for the company. Domash advises against investing in any stocks valued at less than $5 per share.

4. Stay the course and avoid panicking. The market is subject to regular fluctuations. If you dump your investments when the economy takes a downward plunge, you will take significant losses. Eric Tyson, the author of "Investing for Dummies," says that you should be prepared to keep your investments in the market for a five- to 10-year period.

Tips & Warnings

• There is a difference between being a slacker and not knowing what you are doing. If you are an inexperienced investor, it is best to consult a financial adviser who can help you develop an investment plan.

References

• "Investing For Dummies"; Eric Tyson; 2008
• MSN Money; 10 Rules for Picking Stocks; Harry Domash; September 2007
• "The Stock Market"; Rik W. Hafer et al.; 2007