Staying Prepared to Invest
Monday, November 7, 2011
Staying prepared and ready to invest when the markets are down or rolling like a roller coaster is a challenge, but there are a few key actions that will help. There are obvious and the not so obvious steps to take.
When stocks or ETFs or mutual funds are sliding the question always is when will they land and when they do land will there be a deafening splat or will you and the markets pop upright ready to go?
The obvious get ready actions:
• Continue to monitor the markets at your normal pace whether it be weekly or daily.
• Pay attention to key news items like new housing starts, sales of existing homes, unemployment trends and the level of manufacturing. These indicators are important because when people buy a home they usually have to spend more money in the months ahead furnishing or fixing up their new home to match their desires and needs. The more employed mean there is more money going into spending pockets and when manufacturing is climbing employment becomes more stable and even increases which means more spending money in everyone's hands.
• Review your investment software or other means you use to get by signals just as if the market were climbing.
The less obvious actions that will help you grow your portfolio are:
• Evaluate the strategies in your software or the settings in your charts. On a monthly basis for the last few months, or even weekly, which strategies (rules for buying and selling) had the least losses or even made money while the markets dived. Especially compare their results to the S&P 500 so you have a guidepost with which to compare all your groups and strategies. In this manner you will discover when groups and which strategies hold up when times get tough.
• Evaluate the groups or universes of stocks, mutual funds or ETFs you use for your investments. Has the climate changed so that different types will be more likely to climb in the future? If this is the case, have you put together a group of these potential ticker symbols? Unless you have kept a diverse selection of groups on your desk or in your software you are likely to miss the next group or groups of symbols that recover first from the current market slump.
Perhaps the biggest challenge is to keep yourself positive and ready to take action when the opportunity arrives. The easiest way to keep yourself ready is to remind yourself that investing is like going to the exercise club, jogging, hiking, swimming or playing tennis every day. If you skip a day or (gasp) a week you find yourself quickly out of shape and fighting to get back into your groove. It's a lot easier to stay in shape and to stay prepared than to get back into shape or get back to a readiness level for increasing your portfolio.
Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. An experienced business manager and journalist, he has been a registered investment advisor representative, also a professional photographer who loves escaping to the wonders of Glacier National Park in Montana. View his software at: http://www.dynamicinvestorpro.com/
