What investment strategy is recommended for everyone who is invested in stocks in today's falling bear market?

Question

We have our retirement investments with a large firm, but we do not know how to advise our financial manager as to what we should do today?

Answer 1

With the fall in prices of stocks in this bear market, it would be time to use value investing strategy.

Value investing strategy requires one to spend a lot of time and effort to search for undervalued stocks. With the bear market, the search might be easier.

But one must note that if you adopt such a strategy, you might need to be invested in the stock for a long time. As such, the capital that you used to adopt such a strategy must be money that you do not need in the near future, say around 5-10 yrs because investment profit will take time to be realised.

Answer 2

I´ve been investing for more than 20 years and trading for almost 14, and I can tell you that if you want to make BIG and FAST profits, I recommend you trading rather than investing, trading can help you to go from rags to rich.

If you are investing, you must have already achieved some degree of financial success, long term stock investing and FOREX can help you become much richer than you are today.

My experiences as a Nasdaq Market Maker, Head trader of several brokerage firms, and currently as a professional trader and private hedge fund manager, I can suggest you that:

We trade because we want quick, short term profits on a consistent basis. We want to cash flow the market. Milk it like a cow.

Make consistent, small, short term gains rather than trying to hit a home run on every trade. Don't ever forget that.

Don't marry a stock, marry the idea of making money trading stocks. That's the only way to do it.

For me "All stocks are equally worthless”

I don't hold on to any illusion that the stock market will continue to go up and provide a nice retirement for me.

I could care less which way the market goes. It's irrelevant to me if the market goes higher, crashes or moves sideways for the next 50 years. I really could care less. Stocks are just four letters with two prices next to them that I use to make a living trading.

Trade ONLY when you have a clear, easy and identifiable advantage, because without a CLEAR EDGE your odds of success are NO better than a flip of a coin… That´s why so many new traders (and investors) lose money.

Take a look at any daily chart of any index or stock and you'll probably see the most volatility and the biggest opportunity for profit during the first Hour of the stock market's opening.

The popular thinking and conventional wisdom is that you should wait about an hour before you start trading.

But if you do, you'll miss the big, fast moves that stocks make as all the amateurs let their emotions out through their

online accounts, usually right after they read some news headline or hear Maria Bartiromo go off about a stock on CNBC.

It's easy to see why trading the open is the market's prime time for profiting from other online traders.

The market's open is very volatile - that is the perfect environment for LARGE, FAST profits.

Learn to trade as a professional Market Maker ,not as an emotionally driven amateur trader or investor with few thousand dollars in an account at Etrade.

There isn't any other time during the day or any stock you can invest in, that can make you 1, 2, 3, 5, 7 or more points

in minutes OTHER than during the first hour the stock market is open. That's why I love trading the open so much.

I trade only when I have an edge and that means "only the first hour the market is open".

If you are a beginning trader, you can give yourself an unfair advantage in the market trading this way.

I can carry on with the advises about how to make money trading, but if you ask me:

"What is the best thing you can do for me?

I will say:

Give yourself a BIG favor and go to this "Top Secret" site and learn how to get the BEST stocks that will make the largest and fastest day trading profits you´ve ever seen, all by yourself...

www.onehourtrading.com

After you review this site you won´t need system, strategy, book, software or mentor to tell you what to do,

you will be able to profit HUGE every day.

Good luck and good trading,

John Fontaine

Answer 3

Assuming you are a long term investor, now is the time to start looking for bargains in the stock market.  

Most people think that times like these are when people should avoid the stock market but truthfully, these are the best times to begin or expand investing.  

You have to be realistic though.  You can buy a "good" stock today and because the market is in the crapper, that stock could go nowhere or down a little more.  However, you must realize that the economy will recover.  Keep saying that to yourself.  It will recover.  It always does.  That's how economies work.  

So that stock you buy today for say $100 might dip to $90 but then shoot up to $130 (or whatever) when the economy recovers.  Most people mistakenly believe that they will just wait until the economy improves before they invest in the stock market.  The error with that thinking is that the stock market rises in anticipation (very important) of the economy improving.  I.e., the stock market doesnt wait for "good" economic news to appear before it rallies.  It rallies in anticipation of good news coming say 6 months from now.  

That means you want to buy when things look dire.  There's an old addage on Wall Street:   "When they are crying, you should be buying!"

Answer 4

Actually, I would disagree, stocks are NOT on sale, as many in the media, etc. suggest. Stock investing is not like buying a shirt, just because it is cheaper doesn't make it better. Stock history tells us that stocks with superior earnings, profitability, etc. will be priced higher, and PE actually has very little to do with stock price action.

Having said that, in the current market, taking long positions in the market is not advised. Sure, the market could bounce higher, but there is currently no leadership and all the indexes are trading well below their 200day moving average and who knows where the bottom is. I don't think the concern should be a little more downside, look at the prices of many of the socalled 'bargain' stocks. Have they dropped a little in the last few weeks? No. They have dropped 10-20-40% in a few weeks, when the market has dropped 5% or so. Therefore, a little downside risk is not the concern, a major downside risk is.

Therefore, in this market, if you are experienced, shorting is one option. Option 2, at least minimized major downside risk buy buying an index ETF, such as QQQQ(nasdaq), SPY(S&P500), or DIA (DOW), if you feel strongly that a bottom is in and you are a quote 'long term' investor. Whatever that means, which frankly to me means, you're just want to take a buy and hope approach to investing. True, over the long term the market does rise, but that doesn't mean you won't suffer thru some major 20-40% declines in your portfolio. Are you read for that? Most people aren't.

So, if you want to go long, wait for the market to show some signs of stock leadership, wait for the indexes to at  least recover to their 200 day moving average, which is a major point of support in EVERY bull market.

Answer 5

Generally investments for retirement are the reverse percentage of your age. If you are 30 you should have 30% bonds and 70% stocks. The risk involved should be lowered with age. It is good to have a strategy of using cash to buy during down times. I prefer an online broker like TDAmeritrade and sell during the ups and buying during the downs on stocks that I believe will have good long and short term gains. Cash is good in this environment, but sectors like energy, materials, railroad transportation, even some biotech are good. You really have to do your homework. Here is a helpful link to get reports on Sectors. Notice the sub-sectors, I set it on energy.  It has very useful information. I also like CNBC. I watch it and use this link, daily. Fast Money and Mad Money are excellent shows for tips. Good luck, and don't forget to keep cash on hand.

Answer 6

Stay away till the dust settles

Answer 7

Buy low, sell high. Prices are low right now so you shouldbe buying like crazy.

Answer 8

Yes, buy low and sell high is the right answer. At the tops and bottoms the majority is always wrong.

Myself, I get nervous when we hit new highs thinking I should sell NOT when we hit lows.

After we have fallen 20% now, now is not the time to sell. You should be sticking to your plan. If you don't have one, make one. Diversify across a number of types and sizes of stocks, styles, sectors, and maintain you balances.

Theoretically at this point if you were balanced with a good allocation between stocks and bonds you should be out of balance now and be reducing bonds and buying stocks to restore the balance.

Reallocation is a way to buy low and sell high. If bonds go up (and they have) and stocks go down (and they have) you should be taking profits in the bonds and buying stocks cheaper.  

But it sounds like you don't have a plan. That is what your advisor should be helping you with creating. That is what he gets his money for isn't it?

Good Luck.