Today, I plan to share the investment insights Benjamin Graham, Warren Buffet’s mentor, gleane...
Bypass the "Bear" Trap (Part 2)
09/09/2008 12:00 am EST
Here are your choices.
There are two things you can do to thrive in today's market:
1. You can stay in the big names that are paying regular dividends—the companies that might be feeling the pinch from the current market conditions, but the ones that are going to come through it with flying colors.
2. Or, you can trade options and simply simulate the gains you might normally enjoy from owning stocks but without the long-term time commitment.
It seems like everyone on Wall Street and certainly in the financial press wants to say that the bottom is here and that it's time to start picking up stocks on the cheap. But they've been calling for the end to the pain for many, many months now and yet we're still waiting.
If you're sitting on the sidelines in cash, you might have saved some dough, but you haven't really made any, either. That's no fun. In fact, that shouldn't even be a consideration when there are so many ways you could be padding your trading account with fat profits…if you only know where to look.
Follow the money flow!
Forget the markets, the economic reports and the people on TV who get paid to make predictions that invariably never come to pass.
This summer's trading action has felt like death by a thousand cuts. The markets are slowly, and painfully, grinding higher—only to be set back by fear, malaise or the wind blowing in the wrong direction, it seems.
If I can teach you anything today, it's that you should become a student of sector rotation. That is, there's still plenty of money flowing in the markets, and while it's leaving the troubled industries like housing and the financials, it's still there and it's pouring into high-demand areas like commodities and healthcare.
I do this in my Tactical Trader trading service, and you can do it, too. Simply start by cherry-picking the top-performing sectors, and then take a look at the companies that are doing well. Your mission is to find the best of the best names, and to buy call options on them.
So, where do you start?
More in part 3 tomorrow.
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