The US stock market has seen tremendous highs and lows over a volatile 18 month period. CNBC analysts predict that the market will end on highs, but that 2022 will bring significant drops as the economy finally comes to terms with recent spendings. With the Fed unlikely to put in any sort of meaningful block to keep markets steady, it’s time for investors to become more flexible and look at how they can protect their investments. Research is the first step that will underpin a long-term positive strategy.
Market opportunities
At times of large-scale market deflation, investors need to look for individual opportunities to get ahead. Indeed, USA Today recommends the next four weeks as the ideal time to buy, and such short time frames demand savvy investing. There are two ways to go about this. The first is through standard market research, whether that’s via Benzinga and other classic products, or private lists such as The Crow’s Nest. Finding new ideas for investments is the key – new routes will allow investors to stay ahead of the market.
Proper diversification
Any seasoned investor knows that the key to long-term sustainability is diversification. This protects your portfolio from existential risk by ensuring that all of your capital is not kept in the same place. Going forward, investors must start to make stock picks in a range of industries. Even companies that profited from lockdowns, chiefly big tech, suffered during the past year – their stocks slid significantly in September, according to the New York Times, and dragged Wall Street with them.
Risk averse
Underpinning all of this should be a low risk tolerance. Even the most adventurous of investors will know that this is not a good time to put money into unknowns, and you should too. Keep your portfolio small, and tight, to minimize the risk you’re exposed to. This will also help you to focus on your quality investments and pick your options in a way that will maximize current yields.
The stock market may topple over and with it will come high risk investments and poorly secured instruments. Protecting yourself, by undertaking thorough research and diversifying your portfolio, will shield you from risk. After the storm has dissipated, you can get back to making gains on what should be a stock market rising to strength once again.
Disclaimer: This content does not necessarily represent the views of IWB.