Markets are sliding. How should you react?
On Thursday our editor, John Stepek, took a look at Wednesday’s “big, scary slide for markets”.
He admits that, “at times like these it’s easy to lose your head” since “one half of you is screaming ‘sell!’ and the other half is screaming ‘buying opportunity!’” The causes of the panic are easy to see, “America is about to stop printing money, and markets are worried that Europe won’t pick up the baton”. However, “when you boil it down, your potential actions are limited to four basic things. You can buy. You can sell. You can ‘go short’. Or you can step aside and do nothing”.
John “can see markets falling further from here”. However, “shorting is a tricky business. Good timing becomes much more important when you’re going short. Selling may not be a smart move either. Momentum traders base their strategy on holding shares only as long as they keep going up in price. However, for long-term investors “the fact that the price has gone down is neither here nor there”.
Instead you might even want to think about buying. “The nice thing about a market correction is that it gives you the opportunity to buy an asset that you want for a lower price”. Regular investors can do this by simply rebalancing their portfolios to make sure that their asset allocation doesn’t get out of line with their ideal model. Another trick is to keep a watchlist of “stocks and assets that you’re tempted by, but have just been too expensive”.
However, “all of these actions hinge on one thing – having a plan in place”. So, “if you don’t already have a plan, don’t pile in (or out) on a whim”. In fact you should “take some time to consider your ideal asset allocation and to set up a list of assets you want to buy”. You might also want to look at MoneyWeek’s model investment trust portfolio. To get access to the portfolio – and get your first four issues free – sign up for a trial here.
Is a crash on the horizon?
Markets across the board are bleeding red. Dominic Frisby looks at which way you should go.
• Is a crash on the horizon?
Is the housing bubble about to burst?
Despite house prices having shot up, many still claim that housing is affordable. Bengt Saelensminde looks at whether this is really the case.
• Is the housing bubble about to burst?
Join us at the first ever MoneyWeek workshop
On Saturday 8th November, John Stepek, Merryn Somerset Webb, Stephen Bland and Ed Bowsher are holding the first ever MoneyWeek workshop.
Join them on the day and you'll get detailed, practical advice you can act on immediately, to improve your investing in 2014 - and beyond.
But places are booking up fast - reserve yours here.
Stephen Bland will be speaking on behalf of Fleet Street Publications Ltd, sister company to MoneyWeek Ltd, and is authorised and regulated by the Financial Conduct Authority. Your capital is at risk when you invest in shares, never risk more than you can afford to lose. Customer services: 0207 633 3600. FCA No 115234 http://www.fsa.gov.uk/register/home.do. The MoneyWeek Workshop is taking place at the World Money Show. MoneyWeek Magazine is an unregulated product published by MoneyWeek Ltd.
This Microportal is built on the 2day Microportals platform which provides you with 3 click access to local and global information crucial both to your personal and working life. The platform provides live local data on transport, what's on, accommodation, eating out, shopping, sport, religion and weather as well as comprehensive reference and resource sections including TV, radio, online shopping, route planning, health, education and more.
Copyright © 2004–2014 2day Microportals, East Quither Farm, Milton Abbot, Tavistock, Devon, PL19 0PZ, UK.