Making money in a yucky marketMarch 31, 2008
Mark on the markets Mark Patterson
Making money in a yucky market.
After a 20% decrease in the value of many peoples investment portfolio, the values have, for the mean time leveled out. Many are happy that the bleeding has stopped and their values have stabilized, happy only because the really bad pain seems to have subsided.
There are many opinions as to whether we have seen the bottom of this correction or bear market. Before the correction started, the bulls thought the market would keep going, that is why they are bulls, and the bears thought the market was in for a correction and bear phase of the cycle.
Now it seems as though the bulls believe we have seen the bottom and the bears think there is more downside to this U.S. equity market.
I must side with the bears. Not to say we won’t see rallies to the upside, I feel they will not be sustained and we will drift lower to sideways.
You can do a couple of things in a market like this; you can do nothing and wait for the market to come back. You can change the mix of your portfolio to reflect areas to grow in bear markets. You can trade a portion of your portfolio to take advantage of the tedious sideways movement, or you can agressively trade your positions with futures or options contracts, long and short to make money regardless of the direction of the market.
The most simple is to do nothing. Many people will ride out the storm, and that is OK. It could however be a long storm with a lot of sea sickness.
Much of what I am referring to is nothing more than hedging existing positions which are a form of risk management. You may reject the idea at first, but do some research on hedging your portfolio. You may find that hedging is much easier than watching your investments just keep going down and feeling helpless.
Many investors will go to their mailboxes in a week or so to get their quarterly statements. Show some courage and open it, instead of throwing it in the drawer with the bills and other mail we do not want to open.
The stock market will get better, someday. I suggest you not wait for that day to come without action to grow your assets, now!
Mark Patterson is a registered investment advisor with MHP Asset Management LLC, and can be reached at 447-1978 or Mark@MHP-Asset.com
MHP Asset Management, LLC
P.O. Box 460, Conway, NH 03818
Phone: 603-447-1979 Fax: 603-941-0904 |
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