Well as Bill Gross and many others have announced, the market is dead. What they really mean is those days of financial advisers saying "well over the history of the market we have averaged 8-10%." I hate when people say that and I was an adviser. Ask all the people who planned on retiring in the last 5 years and the next 5 years what they think of the market. I do believe in the markets and do believe on putting money into stocks, options, ETF's, etc... Almost all types of investments have a situation where they can be used appropriately but I feel like putting money in a company and looking at it every so often is gone. No more holding a mutual fund or stock for years and years.
So if we can't invest in the market what can we do? We can trade it. The global recession of the past few years has all but crippled most investors and they set back and wonder went wrong. After all they gave money to an "advisor" and he "invested it and now they have very little. News flash, those advisers 1) don't know near as much about the market as you think they do and 2) don't always have your best interest at heart. So back to my point of trading. It is going to take a much more knowledgeable "investor" to make money year in and year out in the market. I think that it can certainly be done but again you are going to have to know what you are doing and in my opinion get in and get out at specific times. With all the options for investments these days and the ability to short or go long on just about anything you want with the invention of a new ETF every day and in particular leveraged and sector specific ETF's.
Look the markets do things for unknown reason and no one can truly tell you which way it is heading. We can speculate and give reasons but at the end of the day there are so many forces pushing and pulling the market in different directions it is impossible to predict. If someone could do it then well they would be managing a very large hedge fund somewhere.
So the questions is if I am advising that you trade the market, what do I mean? When do I trade and what do I trade? Look I am not an advisor and am certainly not looking to give specific recommendations here but what I am saying is learn something. The most successful traders, trade in only a few stocks or sectors. They learn that sector extremely well and learn, as best they can, how that sector works. What I am basically advising is that you learn to time the market....... Now that all of you who ever took a finance have picked your jaw off the floor let me explain. As I said earlier you simply can't put your money in and leave it. You have to find something you know get in and take profits often. Not only learn to take profits but learn to hedge some of your bets with options or future. While futures are out of the reach of the average investor options certainly aren't and with leveraged ETF's you can get both in a portfolio.
Me, personally, am a big believer in material assets. Material assets like Gold, silver, real estate, farming products, etc.... I also am a fan of energy. Why you ask? I think they are some of the easiest to learn and understand.Why are they easier in my opinion? For a couple reasons; 1) they tend to be more cyclical. Look at charts for Gold and Oil and think about it. When does gasoline seem to be most expensive? 2) There is only so much physical oil, gold and silver in the world. While we have tried to produce these and most specifically oil from other products we haven't truly succeeded. Taking what I just said in to consideration and with demand not slowing for these products what will happen in the long run? With that, keep in mind a said trade. So learn the ups and downs and the cycles of the asset. I also mentioned real estate above. I believe in owning property but also in high dividend stocks. I like to own REIT's (Real Estate Investment Trust) and any company that can support a large dividend. Rules and regulations make it so that REIT's and other companies like transportation companies, companies that use tankers, require these types of companies to shell out most of their earnings in the form of a dividend. I am not sure of the reason and honestly its not important for the sake of this conversation. For these stocks I rarely look for a stock that I believe is going to increase dramatically, I look at the dividend yield. I can lose 5-10% in a year and not really care as long as that trend doesn't continue. From my experience they have smaller changes in price but I am looking at the dividend. Some of these stocks have dividend yields of 8-14%. I love cash flow and dividends can be apart of that strategy (I will have a future article on this).
Again, I am not an investment advisor and would certainly recommend talking to a financial planner but preferably a CFP or even better a CPA. I feel like a financial plan is a very valuable tool in life so please consult with someone who can help you put one together.
The market is becoming more and more difficult to "invest" in. Find stocks or ETF's with volatility, learn their movements, practice some trades and make some money.
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