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 don?t seem to fit, or offer little hope of coming back any time soon.

Looking Backwards

Periodically, I?ll 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 I?ve made a decision whether I?m 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 you?d 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 can?t tell which chart I?m sending you first. As I mentioned before, the results may surprise you!

One strategy you won`t see from us when we?re 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.