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Saturday, July 3, 2010

Heading into the woods

Sticking to a buy-and-hold strategy at the onset of a bear market is financial suicide.

In an emerging bear market, keep the following points in mind to maximize your gains ( or just to minimize your losses):

Review your situation.
Remember that cash is king.
Stick to necessities: In an economic downturn, defense stocks generally outperform the market. Defensive stocks are stocks of companies that sell goods and services that people need no matter how good or bad the economy is doing. Good examples are food and bverage, energy, utilities, and certain healthcare stocks.

use trailing stops.

Uncertain Markets:
Sometimes markets move sideways or very little either way until investors and participants in the economy figure out what's what.
Pinpointing uncertainty is tough. Bullish and bearish may both seem persuasive, so you may be left scratching your head, wondering what to do. In this case, your patience and diligence will pay off.
Or treat uncertain markets as bear markets until your research starts to give you a clear idea of the market's direction. No matter hoe adventurous you are, the first rule of stock investing is to minimize or avoid losses.

1 comment:

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