Where do you stand at the end of the third quarter 2005? Will you be making money in your account this year? Theres only one quarter of 2005 left! The overall market averages have not done well at all! At first glance, it appears that if you own large cap growth stocks, like the well known blue chip names that dominate the Dow and the S&P 500 Index, your money may have been better off on the sidelines! Once again, another quarter has rolled by where small caps, foreign markets, technology and commodities have run the table. And these sectors continue to flash more and more buy signals, even today. Its not too late! This is a sector driven market. Those investors with money in the right sectors will do well. Those that are along for the ride will find themselves waiting at the curb. Staying Safe In A High Risk Market There are MANY paths you can take when things start moving against you in the market. Some of the other methods involve selling calls against your individual stocks, buying inverse market funds and inverse index funds. You can also move into other types of investments, like foreign markets and commodities (as mentioned earlier, both of these areas have skyrocketed this year). You could always put money in bonds, if interest rates are in your favor. Just keep in mind that bond prices go up and down, so you will always have your principal fluctuating in bond investments. Always. One of the very simplest, and yet, one of the most important steps you can take is to do a little housecleaning. Throw out the stocks that just dont seem to fit, or offer little hope of coming back any time soon. Looking Backwards Periodically, Ill review a position backwards. That is, I will check out the trend chart and its patterns, the strength of the sector, check out the relative strength of the stock against the market and the peer group. At that point I will step back and decide if this is something I would want to buy today. Not hold onto, but rather, buy today. You have to really love it. Once Ive made a decision whether Im a buyer, only then will I look at the NAME of the stock. Try it; you may be surprised with your decisions! You see, many times we look at the name of a stock we really like and we are pre-disposed to give it a pass if it is not performing. Sometimes, our sub-conscious has already made up its mind before step one! Now, if youd like to try this experiment on your own holdings, then email me at tom@mullooly.net and give me the names a few stocks you are concerned about. It has to be more than one stock, I need to mix them up and remove the names, so you cant tell which chart Im sending you first. As I mentioned before, the results may surprise you! One strategy you won't see from us when were in a high risk market is doing nothing, and just "sitting out this dance. You've worked too hard to get where you are financially, the last thing you should do is sit idle and let the market take your profits away from you. Reducing the chances of a loss in your account is what should be of supreme importance when the market is on shaky ground. |
