Your Four-Step Strategy for Market Uncertainty

Posted by Sharon A. Daniels - Uncommon Wisdom

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market volatility

We have been warning you that the U.S. economy is still sinking fast despite massive government spending, lending and guarantees.

In fact, there are a growing number of uncertainties facing our economy and financial markets today … fully three years after the financial crisis began.

There’s no escaping the impact this is having on fragile financial markets either.

With both negative and positive crosscurrents buffeting the markets each and every day, it’s no wonder we’re witnessing such extreme UP and DOWN moves in stocks!

We’ve never seen such a sharp split in market sentiment either that has led directly to growing tensions in financial markets.

In fact, all year markets have been twisting and turning wildly. One thing is abundantly clear about today’s market climate … sharp volatility is likely here to STAY!

market volatility

Let’s face it; volatility has become the new normal. There is no question this can be frustrating, because wild swings make it all the more difficult to earn consistent returns.

But rather than offering only a doom-and-gloom investment scenario, today’s uncertain markets can present unique profit opportunities as well. Remember, there are always alternatives … IF you’re willing to follow the right investment strategy for your needs.

Let me explain some of the key steps we’re taking at Weiss Capital Management to cope with market volatility …

For starters, if recent history is any guide, then the old familiar set-it and forget-it strategies of the past may no longer work successfully for you. Your portfolio may end up where you started with little or nothing to show for your efforts.

Instead, adjust to the new market reality — and potentially profit from volatility — by considering an entirely new and different investing approach.

Here are five key steps for investing in volatile markets …

Step #1 — In volatile markets, it’s better to be safe than sorry. This does NOT mean you must abandon markets altogether … it DOES mean that investing today requires harder work to earn consistent profits. Plus, you must recognize that market risk is higher than normal.

Recognize that lower returns are likely in the years ahead. Don’t count on simplistic buy-and-hold strategies … and don’t take on additional risks just to gain a small increase in overall returns — especially with the core part of your portfolio.

Step #2 — Be more flexible with your portfolio, but highly selective about new investments. Don’t take anyone’s recommendations or claims about performance at face value. Ideas are a dime a dozen these days, doing your homework is absolutely critical.

There are still ample opportunities to grow your wealth in today’s difficult markets, but you may need to look for specialized ways to take advantage of volatile markets.

Step #3 — Grab gains off the table sooner … AND be willing to cut losses quicker in effort to preserve your wealth. Consider working with an investment advisor who is experienced using inverse mutual funds or ETFs to help you hedge against downside risks or even profit from them with your speculative capital.

Step #4 — Expect overall market volatility to run rampant in the years ahead and adjust your investments accordingly. Depending on your personal risk tolerance, you may want to consider hedge-fund-like strategies that allow you to earn potential gains as markets fluctuate both up AND down.

Sherri Daniels,
Uncommon Wisdom


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