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How We Select Stocks

With more than 65,000 stocks available around the world, it can be difficult to select the right ones for you. At Edward Jones, we are very selective about the types of stocks we recommend. We use a disciplined approach to find those that align with our investment philosophy and recommend you stick with quality, diversify and invest for the long term.

Quality – our dos and don’ts

Because we are committed to quality investments, we don't promote the hottest, newest stock you heard about on TV last night. Over time, we've found that most people who go down that path are disappointed. That's why you may actually hear your financial advisor say "no." There are investments we just won't sell, we believe there's too much risk.

Here's why we believe in quality:

  • Total Stock Returns – Companies that we believe can produce both current dividends and long-term dividend growth offer greater consistency and less volatility than lower-quality, non-dividend-paying stocks.
  • Resilience in Down Markets – Standard & Poor's (S&P) defines quality rankings (using a rating system of A through D, from high to low) for individual stocks. The ratings are based primarily on the consistency of a company’s earnings and dividend growth during the past 10 years. We believe higher-quality companies (B+ and higher) usually are able to generate more consistent earnings and dividend growth. Historically, this has helped them perform better during down markets.*

Diversification – don't put all your eggs in one basket

Diversification is a strategy to help make sure your investments aren't concentrated in a certain type or area. For example, an industry can experience a "bubble" where stocks become overpriced and don't really have any track record to speak of. But thousands of investors may put a huge amount of their stock money into shares in that industry. When the bubble bursts, these investors lose their principal. Spreading your money among many different sectors can help reduce your risk. Here are our suggestions for your stock allocation:


Long-term perspective – time can be on your side

Quality and diversification work only if you hold your investments through both good and bad markets. Even quality stocks can go down if the market drops, which may cause you to second-guess your strategy. Don't. Remember why you're investing, and talk with your financial advisor.

Take a look at this chart that shows different holding periods. As the holding period gets longer, the swings between the "best" and the "worst" get less and less dramatic.

For example, during the five-year holding period, the worst decline was over 6%, but that is significantly better than the decline of 43% for the one-year holding period. Hold stocks for 10 years and see what an even greater difference time can make. And during a 20-year time frame, the worst period resulted in a gain of 6.4%.

Don’t lose sight of the importance of time. Focus on the long term and remain disciplined during short-term market volatility.


  • Systematically invest – Try to invest regularly when you have the money available. Don't wait for the "perfect" time to put money in the stock market. This strategy allows you to buy more shares when prices are lower and fewer shares when prices are higher. This is the best way we know to "buy low."
  • Reinvest dividends – If you don't need the income, reinvest your dividends into the same or another investment – whatever is appropriate. This can help build up the number of shares you own in either stocks or mutual funds. That way, when the market is down, you are buying more shares.

How we can help

It's important to talk with your financial advisor about what's appropriate for your specific circumstances. This includes a discussion about what your goals are, when you want to reach them and how much risk you're comfortable taking to get there.

Important Information:

1Past performance does not guarantee future results.

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