The markets have been totally out of control and very unpredictable lately. Taking a long position in the market right now is potential financial suicide. And even if you survive it the chances of seeing any decent return in the near future is not too likely unless you really know what you are doing.
Most average investors and financial advisors do not have a clue and certainly do not have the financial flexibility and patience to wait it out like a Warren Buffet. The recent market fluctuations are really starting to show what the S&P is worth and it is pretty disconcerting.
Think about it, if you normalize for inflation, the S&P has gained less than 24% in the last 40 years! That's an annualized .54% gain. That is pretty dismal indeed. Now, the odd thing is that my investments are all considered 'high risk' by the average financial professional. Yet, during this time my investments are doing even better than before.
One investment pulled 24% just this month while the markets were dropping like a rock. The obvious reason for this is that the trader knows how to take advantage of this volatility. Even though his simple returns have been less in the past, as low as 8% in a month, he has not had a single losing trading day in 18 months. Yes, it is high risk in that it is not a security.
However, there are several ways we are controlling risk.
1. We have a insurance policy on all our deposits like a bank, up to 100,000 USD.
2. The trading professionals do not take big chances with our money (and theirs). They only trade to win, not for fun. They only take trades that show a 95% chance of success.
3. At the rate of return we get in the high yield sector we can pull our principal out very quickly and diversify.
Going long in the stock market - as an investment strategy - is dead... for the moment. There's no telling who's going to be eaten alive next.
So what should you do about it? Consider investing at least part of what you have left, if anything, into the high risk, high yield sector. Just make sure that you are dealing with professionals who have a track record and good management history.
Follow these steps:
1. Choose a fund, trader, or system that works and produces a good return. I have systems that run 100% on automatic where YOU control your funds. These systems produce returns anywhere from 5-30% per month regularly and you can set your levels of risk and return.
2. Create an exit strategy for each investment you do.
3. Get your principal out as soon as possible based on your exit strategy.
4. Roll profits and take and income regularly.
5. Diversify some of your profits and enjoy the fruits of the rest.
Done properly high risk investing can be very lucrative and in my view will do much better that .54% annualized for me over the next 40 years.
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