How to Survive This Dangerous Market
- The effects of technology on the stock market
- How to use Science to improve your portfolio
- Investor Strategy
You just have to love technology. The stock market had its most violent week in the history of stock markets, with the Dow punishing us with not one, but two 1,000+ point pummeling’s along with two 1,000 point rallies.
It used to take 6-9 months for stocks to do that, now it takes 6-9 days…or even hours!
The good thing about the new world corrections is that most people don’t even see them, and if they do, they don’t have time to react physically or emotionally. However, that does raise the question of whether this pullback is over, for the simple fact that they must induce fear into the hearts of investors.
If there isn’t some pain endured by the survivors, along with hordes of panic-stricken shareholders who sell at the bottom, is it really a correction? I’m in the business, so I heard the tree falling in the woods, but did enough investors?
Don’t get me wrong, it was painful. After enjoying the best January in over 20 years, we got smacked with the 5th worst February since the S&P 500 was first created in 1923. Never has any human witnessed a new all-time high, followed immediately by a 3300 point, 13.3% thrashing in only 10 trading days.
Congratulations, you just lived through and survived an astounding 22,000 point swing!
I personally think the correction is over, for now… but don’t waste the lesson: take the least risk possible to obtain the return that you need. You know, “Invest for need, not for greed™”.
Surviving this increasingly dangerous market is going to be tougher than it has been mentally, physically and emotionally. Know the difference between when it’s OK to panic, and when it’s not. Panic if we have a legitimate bear market where the economic backdrop reverses. Do not panic during corrections.
Build a plan and stick to it. A retirement master plan that incorporates an income analysis, forward-looking tax-strategies, a “Tactical” investment approach and asset protection using our Wealthguard asset protection system.
We use a very systematic, disciplined and structured approach to managing our clients’ assets, which helps provide protection while delivering strong returns.
When building your portfolio, use the scientific metrics that I talk about on my radio show to your advantage. These are the same strategies money managers, mutual funds, and hedge funds employ for their success. The most common ones are:
- Sharpe Ratio calculates your risk-adjusted return. We use it to tell you whether you are getting the optimum return for the risk you are taking.
- Standard Deviation is a measure of risk. As you approach retirement, you want the lowest ratio possible.
- Beta is the measure of volatility or systematic risk. Lower your beta to see less violent swings related to the market.
- Alpha is the value added by the management of a portfolio. We want to see our portfolios with a five or above. That will show that a lot of value is being added by the portfolio manager.
It’s what we do for our clients every day!
Cheers -Keith Springer
P.S. To see how we might be able to help you, simply give us a call for a free no obligation consultation today.