The stock market continues to be volatile and spit out miserable performances.  Individual investors can’t do much to alleviate this volatility and performance, but with the proper plays and utilization of exchange traded funds (ETFs), stocks and other securities, they may be able to help their own portfolios.

Paul Lim for The New York Times states two ways to benefit from the current market conditions:

  • Diversifying your portfolio: It might be a good time to a look at foreign stocks.  P/E ratios for foreign stocks in developed markets is around 10, down from 14 during the market’s 2007 peak, and around 8.5 for those in emerging markets down from 14.5 near the peak.  REITs, which are down 40% may be another option with which to diversify.
  • Lower expenses: For investors that bought high-cost funds, now is the time to switch to a low-cost fund and avoid capital gains taxes.  The overwhelming majority of funds are down, and some may even offset capital losses, enabling you to kill two birds with one stone.

If you do decide to restructure your portfolio and make the best of a bad situation, consider utilizing our strategy of moving averages and using low-cost ETFs to diversify.

The Vanguard Total Stock Market ETF (VTI) gives good exposure to the overall market; It is down 2% in the last month, and not yet up above its long- or short-term trendlines

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.