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How to invest in an Uncertain Market?
Should I sell and take the cash to the casino? Perhaps put it in a coffee can? Buy Real Estate? What about Gold or Oil? Maybe you should stick to your Financial and Investing Plan. This would be safer and you can measure your success.
What do you do now? Market is nears its all-time high and has pulled back 3%. Do you pull the trigger and add to your winning positions, take some off the table, go completely to cash and wait, or drink Tequila and flip a coin?
Who knows, the answer may be a combination of all, but the real answer depends on YOUR "Financial and Investment Plan". This means you should have a 12 month, 3 year, 5 year and 10 year plan. We always preach looking long-term and investing accordingly, but there are short and medium-term strategies that should be applied for greater overall portfolio performance. If you are in the early stages of your plan (under 35) you should consider adding consistent contributions to your winners, even if they are in a downtrend. Why, because reinvesting dividends and consistent contributions to high-quality securities over time will create wealth. When do you sell them? You sell when the business sector and industry they are in has stopped growing or growth has significantly slowed.
Fixed Income products (Bonds, Preferred Stocks, Treasuries, etc.) have been beaten up over the last 3 months, mainly because of the incredible spike in the 10-year Treasury Yield. But these Fixed Income products were originally being bought for their "income" and the quality of their paper to have the confidence they will consistently pay their Interest and Dividend Payments. As their price comes down, the yields go up and creates a very opportunistic buying opportunity (or reinvesting those interest and dividend payments and making consistent contributions....generating long-term wealth). Nobody can predict Interest Rate movements, but we had nowhere to go other than up, its the speed of the movement that creates volatility and oversold conditions. This is a great area to explore when there are Uncertain markets.
In a recent client note we spoke about all the political and economic headwinds over the next 6-8 weeks. Use common sense and eliminate emotions tied to your investments. Typically when emotions get involved, decisions are usually flawed and tougher to come back from depending on the market conditions.
Look for quality securities, understand their sector growth cycle and consider "defensive" positions if you are unsure what to do. Your Investment Advisor (who must have your best interests in mind with your investments)
Great Investing Begins with Expert Knowledge.
by Ronald E. Lang, Principal - Ron.Lang@AtlasBuildsWealth.com
Atlas Wealth Management (Registered Investment Advisor)
Web Site - www.AtlasBuildsWealth.com