Wouldn’t you like to secure a financial future for you and your family, while worrying less and prospering in both up and down markets? Obviously, this is the American dream! However, it is an achievable dream.
Here are investing secrets to help you achieve these elusive goals:
1. Markets move in cycles. Learn to recognize these cycles and the investment strategies that prosper in that cycle. Right now we are in a secular bear market. Expect a lot of volatility and little long-term market movement within a large trading range.
2. Buy and hold won’t work right now. The reason, see secret #1. You need an actively managed investment strategy to win in this environment.
3. Trend following works in all cycles, especially secular bear markets. Find an advisor or manager who can spot up or down trends and ride them to profits within this longer term trading range.
4. Mutual funds are dead! Exchange Traded Funds (ETFs) are the way to go.They are low cost, marginable, can be traded intraday, give broad diversity of holdings, allow for stop loss orders, cover just about any stock, bond or commodity market and put and call options can be purchased or sold against the ETF position.
5. Risk management is the key to survival. Make sure you or your advisor have a written plan on how to manage your assets. This plan should also be specific as to when positions are entered and when (and how) they should be exited to protect your capital. This plan should be more than the standard investment policy statement.
6. Stay away from CNBC. This is the surest way to poor investment decisions is to get caught up in the 24 hype this channel must produce to keep an audience. If you must watch this channel, do so only during non-market hours.
7. Cut your losers short and let your winners ride. This is investing 101, but it is surprising how many people hold their losers and eagerly take profits on their winners. Let your winners ride as long as the trend is intact. Limit losses to no more than 6-8% of your position cost.