The types of problems looming within the market besides the obvious recession, market volatility and housing fallout include much more serious loopholes like hyper-inflation. A strategy that includes foreign currency, gold, oil and food, plus country-specific stocks and bonds may be worth considering.
Those investors who are in cash right now may have some opportunity to make “safe money” in the markets with ETFs, however, there must be a plan or strategy in place should the market go further south.
1) Although there’s been a decline, it’s never too late to have an exit strategy. If you follow this, you’re not bailing entirely on your portfolio, you’re just taking steps to protect yourself in case the market continues lower:
- Sell one-third of your invested equity positions now.
- If the remaining two-thirds decline 5%, sell another third.
2) We’ve seen big moves in some areas – watch the 50-day moving average, as some areas have gotten close – at least until Monday’s big losses. But eventually, the markets will turn and investors will want to be ready to get back in. Don’t miss out on those opportunities when they present themselves.