Daily Gains Letter

investment management


Crash-Proof Your Portfolio with These Two Investment Techniques

By for Daily Gains Letter | Feb 15, 2013

DL_Feb_15_2013_MoeOne question that hovers in the minds of investors is regarding the direction of the markets. This is mainly because they want to act before the market turns against them—eating their gains and turning them into a loss, or making losses even bigger.

Unfortunately, no matter where the market is headed, there are always experts arguing against or for it. While these experts have their reasoning for what they believe, investors are the ones who are left confused.

Should you sell your stock positions if the stock market is reaching its all-time high or will there be a breakout sending us much higher? A bullish expert might be very optimistic and argue that stock markets are going much higher—the sky’s the limit. On the other hand, the bearish analyst might argue against it.

If an investor looks at these different views, his or her ability to make a rational decision might be affected. The truth; there is too much noise in the markets.

In the stock market, or any other market for that matter, pullbacks and downturns are very normal. So, what can an investor do to make their portfolio crash-proof?

When the stock market declines, no matter how well-diversified you are, you will most likely lose money—when panic strikes in the markets, sellers flee in herds. Just look at the stock market collapse of 2008–2009. There were companies that were performing well, but, as investors sold in panic, they declined significantly.

So, what exactly should investors do when they are unsure about the market direction, and more specifically about their stock positions?

With all this noise about the direction … Read More