Money & Investing - Banks.com

I recently received this question from a reader:

I understand that now is a good time to buy, while the market is down. But do you have any tips for more effective investing during a bear market?

It is true that we often hear “buy low, sell high” during a bear market. However, that doesn’t really give us a good idea of what we should be doing on a more practical level. There are a lot of ideas of ways you can limit your risk while still investing and finding good bargains. But you should consider your individual investment portfolio needs and goals. And, as always, there is a risk that things won’t pan out quite the way you like, but I like these tips offered at Stock Trading To Go:

1. Don’t trust ratings systemes.
2. For your retirement account, considering moving some of your assets into conservative funds.
3. Consider stopping mutual fund automatic investment.
4. Tight stop losses for new buy positions.
5. Don’t rely entirely on analyst recommendations.
6. Take profits quickly and immediately if you are day trading.
7. Consider selling bad positions and moving into cash.
8. Look for defensive stocks with high historical yield (rather than growth stocks).
9. Consider short ETFs.
10. Avoid trying to time the bottom.
11. Get rid of margined postions.
12. Stop buying on margin.
13. Consider high yield savings accounts.
14. Think long-term.
15. Educate yourself about the market and your investment decisions.

It is important to keep a cool head and to make rational decisions based on your own needs, as well as your own research. Now is not the time to follow the crowd. If you need to sell, do so as cautiously as when you buy. It is vital that you ponder your own situation and needs, and not simply go with whatever sensationalist story appears in the media.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

Tags: stock market, bear market, investing blog, investment portfolio,
tips investing, investments, tips bear market

Right now, with the stock market in serious trouble, people are wondering what to do with their investments, and looking for other ways to earn money in the market. This reader brings up an intriguing investing idea:

I hear that the stock market is likely to take a rapid dive beyond lows not seen for five years. I have friends that are telling me to pull out stocks and invest in inverse ETFs. What are inverse ETFs?

Investing in inverse ETFs is a rising trend right now because of the nature of inverse ETFs. First, though, it is important to know what ETFs are.

An ETF is an exchange traded fund. Exchange traded funds are funds that are similar to other funds — groups of investments traded as one. However, with an ETF, you trade as though it is a stock. The same rules, commissions and other stock market conventions apply. These are becoming popular because they offer a reasonable chance of growth. However, ETFs are considered risky.

Inverse ETFs

Inverse ETFs offer a different twist. They benefit from “shorts.” Inverse ETFs gain when the market losers. It’s a bet that something will decline in value, rather than gain in value. BloggingStocks offers four interesting inverse ETFs that have especial promise in these perilous times:

1. Short Dow 30 ProShares.
2. UltraShort Real Estate ProShares.
3. UltraShort Consumer Services ProShares.
4. UltraShort Technology ProShares.

These are ETFs that invest in several companies in one sector (or in the case of the Short Dow 30, one index), speculating that the sector will fall overall. The farther the market falls, the more you receive from your inverse ETF.

Of course, if the measures the government is taking work to actually shore up the economy, then inverse ETFs will decline in value as the stock market recovers. But they could make a good hedge for some of the stocks you are riding the market troubled out with. Or, if you have the risk tolerance for it, you could stake your future in earning on inverse ETFs.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions.

Tags: stock market, stock market news, investing blog, inverse ETFs,
reader question, investments, exchange traded funds

With the volatility in the US stock market — and in other investments — many are wondering if something more tangible would make a better investment. Gold prices have been trending higher overall since last summer, and that is leading many to use gold as a safe haven investment. And some are making this transfer easy, through e-gold. Indeed, that is the subject of this reader question:

I have been hearing about e-gold from a friend of mine. Should I invest in e-gold?

E-gold is a way of transferring gold, via the Internet, between different owners. Users can transfer gold ownership — the metal itself is stored elsewhere. This is an interesting way to invest in something tangible. And for some people it can work. But you need to be very careful.

E-gold is subject to a high number of scams. These are often known as high yield investment programs (HYIPs), and they are actually very similar to pyramid schemes. The idea is for you to invest, and the refer friends, and then get even more.

Additionally, you should be wary of unsolicited emails, offering such “investment opportunities” as alluvial gold and other similar programs. (Note: Any unsolicited emails offering “great investment opportunities” should be ignored — no matter the market or investment.)

E-gold can work for some people. But it is still a risk. And you should never invest in e-gold — or anything else — merely because a friend asked you to. And certainly not if there is a “referral program” involved for an individual investment.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions.

Tags: e-gold, invest e-gold, investing blog, investment opportunities,
HYIPs, investments, investment scams