Surviving A
Tough Stock Market
A bear stock market is often
considered to be an investor's nightmare: as share values
plummet and hard earned gains evaporate, it's hard to see the
forest for the trees. It's important to remember at times like
these that such downturns, even dramatic ones, are part of
natural economic cycles. The trick is to weather the storm, not
panic, and you may even come out ahead when happy times
return.
Be patient. Be patient! If you are
a long term investor who plans to stay in the market for at
least another 10 years, it's best to ride out the storm without
making any knee jerk decisions. Decisions born out of panic
seldom produce good results. Keep a cool head, study options
out thoroughly, and then make up your mind about what is best
to do with your money.
Get Jim Cramer's Getting Back to Even from
Amazon.com
You may want to adopt a less
aggressive strategy by putting your money in a safer arena like
money market securities. It will still be earning interest
without the risk of losing its value. In addition, keeping
assets liquid will enable an investor to purchase a good stock
when the opportunity arises.
An aggressive strategy is to use a
short sell approach which allows an investor to make money as
the stock goes down. This technique is not for the faint of
heart: there are risks involved in this kind of strategy. If
you a novice in trading in general, or are not well versed in
the short sell, it would be wise to consult with a professional
advisor before adopting such a scheme.
Look for deals: most blue chip
stocks, for instance, are bound to increase in value when the
bear market turns bullish. There are some real opportunities
out there for those who have the experience and know how to
spot a good bargain. As with the short sell approach, less
knowledgeable investors may wish to work with a more seasoned
professional to learn how to find the best value for their hard
earned money.
Your mom was right when she advised you not to put all of your
eggs in one basket. Diversification of your assets ensures that
your money will be as safe as possible during trying
times. Make sure your wealth is divided into at least
four different types of investments (such as stocks, bonds,
etc.), as well as having money in the bank earning interest. If
you are a cautious person by nature who is uncomfortable with a
lot of risk, then your smallest slice of pie should be
allocated to stocks.
Making money when the market turns
bullish again is more likely if you invest wisely during the
downturns and manage your assets carefully. The best advice is
not to make decisions based on panic. Happy days will be here
again!
For useful stock tips that will
help you decide how to succeed whether the market is a bear or
a bull, contact the professionals at Blue Chip Stock Trader
(http://bluechipstocktrader.com/
). Art Gib is a freelance writer.
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