Here's an interesting piece of historical research into the stockmarket. Admittedly it's answered with hindsight nevertheless it still makes a good point.

• The time is 1950 and you're offered two stocks to invest in (for the next 50 years), a new 'technology' company called IBM or the old, staid Standard Oil (now called Exxon)
  
  
• You've been told that over the next 50 years the technology sector's share of the S&P will increase from 3% to 18% while the oil sector's will decline from 20% to 5%
  
  
• IBM will grow its revenues by 12% a year, Standard Oil by 8%
  
  
• IBMs earnings will grow by 11% pa, Standard's earnings by 7%, IBMs dividend growth will be 9% versus 7%

From the facts above it would seem that only a lunatic would bet against investing in IBM. But investing in Standard Oil would have been the better choice (over the 50 years).

• $1,000 invested in Standard Oil in 1950 (dividend income reinvested) would be worth $1.26million by 2003
  
  
• $1,000 invested in IBM in 1950 in 1950 (div income reinvested) would be worth $961,000 by 2003
  
  
• The reason why Standard Oil was the better stock to invest in is simple - Investors have always valued growth stocks too highly and so have usually overpaid
  
  
• Over the time period investors bought IBM with an average price of 27 times earnings
  
  
• This versus an average price of just 13 times earnings for Standard Oil
  
  
• The average dividend of IBM was just 2.2% whereas Standard's was 5.2% so the real money was made by the reinvesting (of the dividend income) into more Standard shares than was possible with IBMs
  
  
• Growth stocks are not known for paying juicy dividends

This Research Comes From The Book “The Future for Investors”

This research comes from a fascinating book The Future For Investors by Jeremy Siegel .

Siegel calls the above the 'growth trap' which is investors fascination (greed?) in always wanting to chase the next Microsoft, Google or emerging stockmarket.

In the book Siegel argues his point that investors should go with the boring, old, tried and tested companies rather than chase expensive growth stocks. And we generally agree with him especially as good and profitable investing is often a boring endeavour regardless of how exciting the stockmarket often looks.

The book also ties in nicely with this document published on the LearnMoney.co.uk site called Why Investing In The Right Sectors Is 9 Times More important Than Picking a Fund Manager

Good luck with your investing!