Lately our news headlines have been focusing exclusively on the recession, financial meltdown, high unemployment rate, Banks going out of business and to top it all, the financial managers who turned out to be total crooks.

Question now remains what do individual investors do? Should they still invest and try to achieve their financial dream or should they just throw in the towel and keep the cash in a shoe box for the rainy days.

Although in Los Angeles, of course, most people consider waiting for their movie stardom as a part of their retirement plan or possible hefty government handout which might just be the break they need, to the rest of us hardworking individuals who choose to invest, where do we find our answers? What course shall we take in this unchartered territory that we call ‘investment’?

Here I would like to share some of my ideas that might be helpful to you, our everyday investors.

The down side of where the market stands, Dow Jones Industrial has wiped out its gain for the past decade. So anyone who invested in 1998 went back to where they were after a great bull market run. 

However, Dow Jones Industrial Index only represents 30 out of tens of thousands of listed stocks. Although when you just follow the Dow and hear in the news that it slips off by a few hundred points, it surely feels like that you are one step closer to the Armageddon, remember not all of the tens of thousands of stocks are down. Rather, some of them actually have made substantial gains. 

The common myth is to buy stocks and hold them for a long term, which investment Gurus like the great Warren Buffett will certainly vouch for. But the concern here is, if Mr. Buffett invests few billion of his own dollars and is willing to wait, he does not specify what he is waiting for. It could well be for his grandkids’ college graduation or his great-grand children’s weddings. In other words, billionaire investors like Mr. Buffett have separate set of investment criteria and risk tolerance.

In most cases, however, average working men or women like you have no more than 30 or so years left before our retirement if we start working relatively early in our life. On average, one has only 10-15 years to actively make as much gain as possible in order to have a safety net for the future. 

The way to achieve that is by setting an investment goal and then, making sure to dollar cost average your investment. The easiest way to do so is to set up automatic deduction from your bank account to your retirement or investment plans. 

Try to maximize your 401K or 403B at work. In some cases, your employer has matching contribution, but don’t count on it in these day and age. Try to invest in your IRA or any other tax deferred vehicles you have access to. The ideal way to find out your contribution strategy is through your CPA or accountant, as every individual has different needs, so is every individual’s tax situation and available options.

After you contribute to your retirement plan, then comes the interesting part of choosing an investment. Remember the Internet Boom when you would receive stock tips from someone in euphoria at a weekend cocktail party who propelled you to believe that if you should follow those tips the coming week, you would join the club of ‘billionaires overnight’ in just no time? In those cases, that ‘someone’ who had invested eventually lost all or most of his/her investment. The reason, that person’s euphoria was more from the influence of a good scotch than from his/her gains from the stocks. Most good news about gainful stocks came out after the fact. That is why you do not need evening news but prophesies, but the odds are that you do not know any such prophet. So stick to proven facts. Do not invest your retirement money in speculative investment however lucrative they may seem to be. Try to invest in listed securities which in this case are the ones listed in NYSE or top NASDAQ, and not penny stocks, limited partnerships, or future to gold mines or solar panels. Try to find out-of-favor sector, and invest in the sector leaders.

Most sectors tend to rotate, which has a lot to do with our democracy and peaceful change in Government. Each President and ruling political party tends to favor a certain sector which in turn makes substantial gain.

Do not misunderstand the meaning of investment for the long term. You do not need to buy a stock at $10 per share and do nothing about it when it rides up to $200 before the end of ‘long term’ arrives. Instead, you can and should take your profit when it made a substantial gain. Also look into some contrarian investment. They normally go against the market and if the market makes a substantial gain, they show modest return but should the market drops; the contrarian tends to perform better.

Finally, be educated and always be hands-on with your investment, but do seek professional advice from time to time. Remember the reckless cowboy mentality of the 1990’s caused more mishaps in the market than constructive solutions.