What\u2019s an Investor to Do? <\/p>\n
Who will win the current battle for market direction? I don\u2019t know (you\u2019ll never find me pretending to have a crystal ball), and frankly, I don\u2019t care.<\/p>\n
Every day there is an opportunity in the market to make money. Every day. Regardless of which direction the market is headed. <\/p>\n
But if you want to profit in today\u2019s market, you must play by the new rules of investing. <\/p>\n
The 5 New Rules of Investing<\/p>\n
1. Buy and hold is dead. <\/p>\n
I hate to be the one to tell you this, but \u201cbuy and hold\u201d is a marketing slogan, not a proven investment philosophy! It was invented in the \u201880s by mutual fund companies and Wall Street to lure more people into investing.<\/p>\n
Ask any investors who used to believe that \u201cbuy and hold\u201d was the right strategy\u2014that good stocks would always go higher if they were only held long enough\u2014what they have now to show for it. Mostly lots of losses.<\/p>\n
Look at the brutal roller coaster \u201cbuy & hold\u201d investors have been taken on over the last 10 years in the DJIA, NASDAQ, and S&P 500 indexes\u2026<\/p>\n
\u2026and how the world\u2019s best blue chip brands\u2014companies like GE, Cisco, Intel, Coke, and Microsoft\u2014went down 30% or more over this same period.<\/p>\n
The key to profiting in today\u2019s market is to actively manage your money. Learn how.<\/p>\n
2. Diversification won\u2019t save you. <\/p>\n
You\u2019ve heard the bromide that says you can survive anything with a diversified portfolio? It\u2019s wrong. In a down market like we just lived through, everything goes down. <\/p>\n
One of the distinguishing features of this bear market has been that all asset classes, economic classes, industries and regions are now correlated with each other. It\u2019s about 90%, the highest since at least 1974, according to one study.<\/p>\n
Financial, utility, technology, energy, drugs, steel and real estate stocks\u2026 they all went down 52%, 32%, 42%, 38%, 62% and 45%.<\/p>\n
Diversification didn\u2019t offer a lick of protection. Just ask the president of Harvard University, who announced not long ago that her school\u2019s well-diversified $37 billion endowment was preparing for “unprecedented” losses that would lead to school-wide spending cutbacks.<\/p>\n
3. Speed is in.<\/p>\n
Unfortunately, people think they lack the intestinal fortitude to trade more frequently, but what they don\u2019t know is that it doesn\u2019t take guts to trade. It takes flexibility and a good plan. I\u2019ll give you both.<\/p>\n
In today\u2019s market especially, it is critical that you take advantage of advances. We have seen\u2014and will continue to see\u2014plenty of big knee-jerk reactions to news that present big profit opportunities for the nimble.<\/p>\n
4. Don\u2019t take a knife to a gun fight.<\/p>\n
In today\u2019s market, you must use every weapon at your disposal. A mercenary uses whatever weapons work\u2014you don\u2019t just go into battle with your .38 caliber, you take your knife, bazooka and poison with you, too. You never know what weapon will get the job done. Think Jack Bauer \u2014 not the Marquess de Queensbury.<\/p>\n
The same goes for us. We will use whatever tool gives us the best chance to win today\u2014stocks, options, bonds, leveraged funds. If it can help us make money, it\u2019s in our investing toolkit.<\/p>\n","protected":false},"excerpt":{"rendered":"
What\u2019s an Investor to Do? Who will win the current battle for market direction? I don\u2019t know (you\u2019ll never find me pretending to have a crystal ball), and frankly, I don\u2019t care. Every day there is an opportunity in the market to make money. Every day. Regardless of which direction…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-358","post","type-post","status-publish","format-standard","hentry","category-stocks-101","wpcat-5-id"],"_links":{"self":[{"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/posts\/358","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/comments?post=358"}],"version-history":[{"count":0,"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/posts\/358\/revisions"}],"wp:attachment":[{"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/media?parent=358"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/categories?post=358"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/tags?post=358"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}