Making money in any market is every investors dream.
The current massive volatility, easily the most I have seen, is making that goal overwhelmingly difficult and dangerous.
Naturally the first step is to avoid some of the major investor blunders such as being "buy-and-hold" (buy-and-hope!) instead of being tactical and/or being all-in or all-out of the market rather than "investing for need and not for greed".
However, fear in making a mistake often leads to paralysis keeping people in investments they shouldn't own or in cash, which in today's world of low interest rates is a guaranteed loss to purchasing power (inflation & taxes).
The key is to focus on the "sweet spot", that inflection point within the market that generates the best return with the least amount of risk.
This is not your grandfather's stock market anymore.
(Oldsmobile snip).
The economy has changed due to the "Goliath", and it requires updating your goals and objectives regularly just as you do with your clothes, car and hair styles.
The rapidly aging populations of not only the U.
S.
but the entire developed world has promised itself benefits which we simply can't afford (yes Greece, Italy etc.
and soon to be America).
This, on top of a massively over indebted populace which is in a draconian deleveraging process that will take years, is creating an economic setting not seen in a generation and therefore difficult to comprehend and properly invest in.
Most of us have never seen a slow growth deflationary environment, which requires totally different investments than what was working just a few years ago or I'm sorry to say what most people still have in their portfolios and 401k's.
(Buy-and-hold kills...
worse than cigarettes) Fidelity put out an interesting article recently, Opportunities In Out-of-Favor Bonds, which I will paraphrase from below: We have just begun to deal with the consequences of this massive debt burden, and investors are fearful that it will be a material headwind to economic growth and asset price appreciation.
Every dollar used to pay down debt is a dollar that is not being spent on consumption or investment.
No one knows how far or how fast the deleveraging will occur, but, in my view, until we reduce this debt burden, the U.
S.
economy is likely to remain weaker than historical norms.
The article goes on to recommend income investments and particularly corporate bonds which you have heard me recommend for several years now: Corporate bonds are not without risk, but given the current yield advantage of corporates over government bonds, investors have been more than adequately compensated for that risk.
Rising Treasury rates would be a headwind for returns, but the excess yield in investment-grade corporates and high-yield bonds offers some protection in such an environment.
I'm glad to see that others are finally catching on.
Better late than never! Investor Strategy - Focusing on that "Sweet Spot" I'll repeat the mantras I've coined - "Invest for need, not for greed" and "Get the very best returns with the least risk possible".
You're not going to outsmart the market any more than George Clooney outsmarted the sea in the Perfect Storm.
The market always presents opportunities and right now that is dividend paying stocks and corporate bonds, many of which are yielding 8-10% and higher.
Getting equity returns without equity risk is our goal.
If you're not collecting dividends and income in this market, you are just gambling, and now is definitely not the time to do that with your family's security.
Play it smart, be the expert or hire one.
The current massive volatility, easily the most I have seen, is making that goal overwhelmingly difficult and dangerous.
Naturally the first step is to avoid some of the major investor blunders such as being "buy-and-hold" (buy-and-hope!) instead of being tactical and/or being all-in or all-out of the market rather than "investing for need and not for greed".
However, fear in making a mistake often leads to paralysis keeping people in investments they shouldn't own or in cash, which in today's world of low interest rates is a guaranteed loss to purchasing power (inflation & taxes).
The key is to focus on the "sweet spot", that inflection point within the market that generates the best return with the least amount of risk.
This is not your grandfather's stock market anymore.
(Oldsmobile snip).
The economy has changed due to the "Goliath", and it requires updating your goals and objectives regularly just as you do with your clothes, car and hair styles.
The rapidly aging populations of not only the U.
S.
but the entire developed world has promised itself benefits which we simply can't afford (yes Greece, Italy etc.
and soon to be America).
This, on top of a massively over indebted populace which is in a draconian deleveraging process that will take years, is creating an economic setting not seen in a generation and therefore difficult to comprehend and properly invest in.
Most of us have never seen a slow growth deflationary environment, which requires totally different investments than what was working just a few years ago or I'm sorry to say what most people still have in their portfolios and 401k's.
(Buy-and-hold kills...
worse than cigarettes) Fidelity put out an interesting article recently, Opportunities In Out-of-Favor Bonds, which I will paraphrase from below: We have just begun to deal with the consequences of this massive debt burden, and investors are fearful that it will be a material headwind to economic growth and asset price appreciation.
Every dollar used to pay down debt is a dollar that is not being spent on consumption or investment.
No one knows how far or how fast the deleveraging will occur, but, in my view, until we reduce this debt burden, the U.
S.
economy is likely to remain weaker than historical norms.
The article goes on to recommend income investments and particularly corporate bonds which you have heard me recommend for several years now: Corporate bonds are not without risk, but given the current yield advantage of corporates over government bonds, investors have been more than adequately compensated for that risk.
Rising Treasury rates would be a headwind for returns, but the excess yield in investment-grade corporates and high-yield bonds offers some protection in such an environment.
I'm glad to see that others are finally catching on.
Better late than never! Investor Strategy - Focusing on that "Sweet Spot" I'll repeat the mantras I've coined - "Invest for need, not for greed" and "Get the very best returns with the least risk possible".
You're not going to outsmart the market any more than George Clooney outsmarted the sea in the Perfect Storm.
The market always presents opportunities and right now that is dividend paying stocks and corporate bonds, many of which are yielding 8-10% and higher.
Getting equity returns without equity risk is our goal.
If you're not collecting dividends and income in this market, you are just gambling, and now is definitely not the time to do that with your family's security.
Play it smart, be the expert or hire one.
Source...