With the advent of the internet, the phenomenon of the day trader and near instant access to information, more and more people are focusing on the short term with their investing. This is almost always a mistake.

If you are a short term investor (which used to mean 5 years or less, but in todays hyper-frenzied world is measured in weeks or months), you honestly have no business being in the stock market. Many people have grown used to the near perpetual bull market over the last 30 years (with, admittedly, minor hiccups along the way) and have lost site that participating in the stock market is, in fact, participating in the ownership of a company.

My favorite analogy is that of home ownership. If you were only going to live in a new city for 3 months, you would not dream of buying a house, because you know that, over a three month time frame, you are unlikely to have enough growth to make it worth your while. However, if you will live there for 5 years, it might be worth it to buy, and if it is 10 years then it is an absolute no brainer.

If your time line is less than 3 years and you are buying stock, you are doing more gambling than investing. After all, there is something to be said for having a long term perspective.