The bear will eat you alive if you let him!
According to investorwords.com, a bear market is defined as “a prolonged period in which investment prices fall, accompanied by widespread pessimism.” There is no denying we are in such a market. So the big question is: what do you do? Do you pack it in? Do you stay the course? Well here are 12 principles to help you survive what may end up being a prolonged bear market. Set your targets on defeating the bear and you can not only survive but also thrive in this environment!
1. Trust God for the outcome. Every financial plan should have a purpose! Every plan should include your faith in God. www.jayperoni.com was created to help you focus on both your faith and finances. Is God the center of your plan?
2. Protect your capital. The first rule is don’t lose money. Rule two is never violate rule one! Do you realize if you lose 50% of your portfolio, you need to double your money to get back to even? How you protect your assets is as important as how you grow your money. Are you protecting your assets?
3. Use common sense. Many stick their heads in the sand and do nothing or worse – invest in things that fall during troubled economic times. Do you know which assets you should avoid and which ones are more defensive in down markets?
4. Do NOT rely on the government to turn the economy around or save the markets. Individuals and businesses drive the economy and markets. The government can throw all the money they want at the economy and believe me Obama and the Democrats are spending like drunken sailors. However, this will make little difference if people do not spend money. Do you know how to profit from this riduculous spending?
5. Invest in liquid investments! Use investment vehicles that allow you to get in or out at a moment’s notice and have enough trading volume that you don’t get stuck holding the short end of the stick. Do you know ways to maintain liquidity and still make attractive profits?
6. Maintain flexibility. This is critical! You must main flexibility in your thinking and potential investment opportunities. Things change all the time. Does your plan allow flexibility to take advantge of short term trends and repositioning for longer term gains?
7. Seek investments that move independently of stocks and bonds. These are often called alternative investments. These investments provide a buffer during down times. Do you own such assets?
8. Hedge your bets. Use investments that rise when stocks fall. There are investments that profit when the stock market falls. These should be a part of nearly every plan. Are they a part of yours?
9. Diversify, diversify, diversify! You will need a good mix of stocks, bonds, cash, and alternative investments. Using multiple asset classes helps diversify and balance your portfolio while reducing risk and increasing your profit potential. Do you know your proper allocation?
10. Be swift to act! be ready to cut losses and take profits when neccessary. Have a target in mind: the price you are willing to sell at in a best and worst case scenario. For example, I will sell when this goes up 100% or goes down 20%. Do you have reasonable expectations and an exit strategy for your investment plan?
11. Look for bargains. Buy low and sell high is the nameof the game. Look for buying opportunities. Buy assets at a deep discount and sell them when they reach a premium price. Do you know how to value assets and know if you’re getting a bargain?
12. Lastly, don’t go it alone! Rely on trusted counsel – someone who knows how to navigate up and down markets. Plans fail for a lack of wise counsel, but with great council your plans can succeed! Do you have a competent advisor who is looking at your best interests and keeping your faith as the center of your plan?
So where do you go from here?
In the coming months I will be developing more resources to help you navigate these challenging markets and recover from your losses. Together we can fight and take back what has been lost. Don’t give up! With a plan, a set of proven strategies, and good, wise counsel, you can get back on course and reach your goals!
If you would like to find answers to any of these questions, please do not hesistate to drop me a line at firstname.lastname@example.org