Managing Your Money : SMALL CHANGE : Investors: Beware Short-Term Trends

Investors tend to focus on current market trends, even when investing for the long haul. And that can be a big mistake, according to Arnold Kaufman, editor of the Standard & Poor’s investor newsletter, The Outlook.

“By not evaluating stocks and other investments over five- to 10-year spans, (investors) expose themselves to too much volatility,” Kaufman says. Investment specialists agree that the key to a substantial return is aiming for it over time, rather than trying to hit the jackpot.

Kaufman cites the current stock market as an example. Major market indexes are near all-time highs and corporate earnings are weak. That makes stocks seem unattractive, but the opposite is true for long-term investors, he maintains.

During the five-year period ended Sept. 30, the S&P; 500-stock index showed an average annual return (dividends plus appreciation) of 9%. Kaufman expects stocks to do equally well in the next five years, which means they should beat fixed-income investments, he says.