Tag Archive | risk averse

Earn higher returns by avoiding the downturns

Just look at how much per share one could save in this example with IBM below.  Stepping aside during a stock’s downturn can lead to higher returns overall for your investments especially when you consider that stocks on average will drop ~20% from their highs and market leaders can drop ~70% (per Investor Business Daily stats).     Buy & Hold philosophies have morphed to Buy & Protect as many studies have shown the increased value in skipping the downturns.   At SmartStops our goal is to help you protect your profits and minimize any losses.

IBM_SmartStops_Performance

The Next Crash Could Be Alot Worse

Lots of pessimism since QE2 is deemed a failure and no QE3 is coming.   Here’s one article that reminds us to ensure we are risk aware and maintain an intelligently adusting protection strategy.     Posted at Seeking Alpha by Michael T. Synder   http://seekingalpha.com/article/274478-the-next-crash-could-be-a-lot-worse

The Next Crash Could Be Alot Worse

here’s a lot of emotion in this market at the moment, and the conversations among traders are nearly all leaning toward the bear side

So what are some of the signs that this downturn on Wall Street may turn into a full-blown crash?

Well, according to the Wall Street Journal, junk bonds are being sold off at an alarming rate right now. Does the following quote from the Journal remind anyone of 2008 at least a little bit?….

A steep decline in prices of bonds backed by subprime mortgages has spread through the riskiest segments of the credit markets, ending rallies in high-yield corporate bonds and commercial real-estate debt.

Also, many of the big Wall Street banks are already laying off workers. In a previous article I wrote about the potential for Wall Street to go into “panic mode“, I noted that Goldman Sachs (GS), Bank of America (BAC), JPMorgan Chase (JPM) and Morgan Stanley (MS) are all laying people off or are considering staff cuts.

The truth is that the big banks on Wall Street are not nearly as stable as most people think that they are. Moody’s recently warned that it may downgrade the debt ratings of Bank of America, Citigroup and Wells Fargo.

Another major story on Wall Street right now is oil. OPEC recently announced that oil production levels will not be raised, even though the price of oil has been hovering around $100 a barrel.

World oil supplies are very tight right now. In fact, the globe actually consumed 5 million barrels per day more oil than it produced during 2010. This was possible because the difference was apparently made up by drawing down reserves.

But if oil supplies are this tight already, what is going to happen if a major war (as opposed to all of the minor wars that are already happening) erupts in the Middle East?

The world is sitting on the edge of a financial disaster.

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