Cat on a Cold Stove

Mark Twain famously wrote that a cat who sits on a hot stove won't ever do it again, but it won't sit on a cold stove either.

And so it goes with many investors, burned butts still skeptical that a bull market is underway right now. True, much of the economy has a certain stink, especially employment. But bull markets launch in such stink, because markets sniff out what's coming next.

Bull market or not, I'm sticking with a 'low sweat' investing approach: a diversified mix of high quality fixed income investments and stocks with rising dividends.

For investors living on their portfolios (or planning to) this low sweat approach offers a giant advantage: you can wait patiently for a bad market to recover because interest and dividend cash keep rolling in, even when the market is burning your butt. So whether the next stove is hot or cold, your investments wait in your account, ready to rise when the market does.

I've been investing this way since the bear market of 2000-2002 and it has served me very well. For more, see "Monte Carlo Mojo" (posted here July 15, 2009) and "Two Pounds of Chopped Livin'" (July 21, 2009).

Background link:

www.latimes.com/business/la-fi-cover12-2009jul12,0,1258839.column