That's the question that's on most investor's minds these days. It's not hard to see that things are a bit better in the housing and credit markets and fewer people are losing jobs if you believe the latest round of data. I think it really comes down to whether you believe "less bad" news equals "good" news. I don't.
This entire three month rally in the markets has been built on the assumption that less bad equals good news. The fact remains that the economy is still in the dumper and jobs are being lost by the hundreds of thousands each week. These jobs are not being replaced by the stimulus spending or business growth. That means that more and more people don't have money to spend on anything but necessities, and many don't even have money for that.
While I don't expect a return to the depths of despair witnessed in October and September, I do expect there will be tough times ahead and many will be caught off guard having fallen prey to the notion that less bad is good.
So the real question is how can you make money on your personal investments in this market. We've experienced an almost unprecedented period of high volatility over the past year and especially over the past six months. Volatility is returning to more normal levels with the VIX dropping under 30 for the first time in months.
In this environment, I favor strategies that create income from selling options. The most conservative of those strategies would be selling covered calls on the stocks you own. I would suggest giving a little upside room to reach the strike prices of your covered calls to benefit if the market rally continues, but don't go too far out or you'll lose the protection the premium income will provide in the event of a sell off.
With oil spiking over the past few weeks, we're back into a position of having to worry about higher energy costs impacting the potential for recovery. It doesn't seem to be big news yet with oil now nearing $70 per barrel, but when it starts to push $80 in a few weeks, it will once again dominate the headlines as we all brace for gas prices at or above $3 per gallon.
If you want to be able to survive the peaks and valleys of the market in the years to come, I suggest you learn to trade options. Not many people have been able to make money in the past 12 months on their investments, but the majority who have traded options to do it.
I'll be teaching a small group of investors the strategies that are working now in a special personal mentoring program that begins in August. You'll get four months of instruction from me and my team of personal coaches. I think it's the best way to learn how to protect yourself and prosper in these tough economic times.
Call me office at 1-888-300-1892 and get the details.
Also, if you're struggling with debt check out my new book at rossjardine.com. If you'll pay the shipping, I'll send you a copy for free. Learn my seven steps for getting out of debt and building real wealth.
Happy investing.
Subscribe to:
Posts (Atom)
