It’s a theme that’s as old as the dirt on your 20-year-old brogues – do we choose to invest as “market timers” or do we invest by spending “time in the market?” Do we look for short-cycle opportunities to move in and out of the market or do we simply stay the course, looking at our stock holdings as long-term owner/investors?

You can argue this from both sides of the coin because both approaches can work. To do it well the short-term, in-and-out way, you need to be nimble, decisive, quick and confident in your market-timing and market-reading skills. To do it well the long-term, buy-hold way, you need first-rate portfolio-building talents, you need to have an appreciation for asset allocation and balance and, perhaps as much as anything else, you need patience, loads and loads of patience.

This note casts its vote for the latter approach, especially for mature, experienced investors who have suffered through the wild-mouse, stomach-churning market gyrations of the past decade or so. These are the folks who have been handed their heads on a platter, not just once, but at least twice and, more likely, three times over the past 13 years. 

This particular strain of investor may well be at the point where they are interested as much in capital preservation as much as capital gain. They are, in all probability, on the downside of their working lives and have only so much time left to build – and maintain – their nest eggs. They literally cannot afford another body blow, because they are quickly running out of time to recuperate financially before retirement – forced or otherwise – kicks in.

So, bearing all of that in mind, let’s take a look at a few Canadian mid-to-large cap, blue-chippers. Let’s take a broad look at the likes of TransCanada, Royal Bank, TD Bank, Sun Life, BCE, Telus, Rogers, Power Financial, Emera, Davis and Henderson, Inter Pipe and H&R REIT, to name just a few. 

The first thing you will notice is that each and every one of them have paid you to hold and wait through stable and growing dividends. They have provided a steady stream of cash flow, even through the market collapse of 2008 and 2009 – and, generally speaking, they have increased their dividends and distributions very nicely in the years since. And now, lo and behold, here in early 2013, many of these same companies are seeing their stock prices at or near multi-year market highs. That’s a double dose of delight!

Now, let’s take a look at some smaller-cap names that we at 5i Research follow closely. Let’s look at the likes of Stantec and AutoCanada and Brookfield Renewable Resources. Guess what? It’s the same general picture as their better-known, bigger buddies – new dividends, growing dividends, improving cash flow and very sweet stock-price gains to boot.

The question, then: Would you really want to market-time the ins and outs of growing, successful companies such as these? Would you have wanted to risk being on the sidelines over the past six months, looking for a purchase-price entry point, while all around you, the market somehow has worked its way through the European sovereign debt crisis and the American fiscal cliff? And now, here you are, looking for a way back in, knowing all the while that you have missed the first 10 or 15% of the market’s upward move, while capturing nothing in the way of dividends during that period? 

We grant that there are always different strokes for different folks. We grant also that buy-hold-and-prosper may not be the best approach for that portion of your portfolio comprising small-cap or spec stocks. By all means, trade around those little sweethearts if you must, but when it comes to your portfolio core, do what the pros have always done: Buy your stake in a solid, profitable, established company, let it pay you out with dividends or distributions while it and the market sort out their nasty issues and then sit back with a nice goblet of Aussie Shiraz as you ultimately reap the rewards of a rebounding market.

This approach is not the high-speed, 100-meter hare that will race you into a gold-medal world of untold riches; it is, instead, the 42-kilometre, marathon-running tortoise that will get you to the finish line perhaps more slowly, but healthy, happy and a winner!