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Saturday, May 9, 2009

Stormy Stock market: some useful ways to win over it (2)

1. Portfolio matters
An important factor is portfolios. Off late, so many portfolios have gone extremely heavy in stocks in market, thanks to the success of this market over the past few years. But this strategy is highly risky. It is a safer way to have less or, at least half of the portfolio in stocks. You can easily make up the rest part with cash. Bonds, property etc middle-ground investments are also another option to fill up the rest portion.
Ready made balanced portfolio funds” have become damn famous off late. A lot of investment houses have launched these new types of portfolio funds. One latest fund among all these is New Star with its Tri-Star product. This fund is a shorter and easier method to make a portfolio of balanced (equilibrium) investment. With a small holding of cash this profitable fund is divided almost equally between bonds, stocks & commercial property.

2. Issues regarding equity Isas, equity bonds and CTFs
Products like Equity ISAs, equity bonds, or CTFs normally track one particular index. Sometimes, professional managers also takes care of their management.
Those products, which are tracking a specific index figure are completely dependant on market. Their performance is also highly depending on the overall performance and ups & downs of stock market. In stock market, many basic equity-based bonds track markets.
Another good option: fund of funds. These make investment in various different funds, and thus the possibility of spreading risk is more. In today’s market, you can hold them within an Isa wrapper, but there is usually a fee to switch funds.
Courtesy to the skills of the professional manager looking after your equity Isa product, the managed fund you have invested in via your Isa should weather the downturn more effectively. Suppose, you own a risky fund; for example- a high-growth fund which invests in smaller stocks. Then it would be a really considerable option to switch to a cautious managed fund.

3. Other types of investments
Always try to follow the stock buying trends and time of the fund managers, and analyse the situations in which they are buying. If you keep your eyes open, you’ll see that the managers normally do not follow the general public trend of running after only those ones which are working at present and valued only at present by buyers. Rather, they search for those stocks which carry definite prospects for future, but are not very valuable asset in market at present, so not valued by public.
You should better go for those defensive stocks, in case you prefer to invest in individual stocks. It can really be a nice and considerable option to buy those stocks whose price rates normally do not fluctuate or respond to the volatility of market. Some example of those defensive stocks are those of utility companies, pharmaceuticals, tobacco producers, food makers, etc.
Don’t get frustrated or disheartened due to this prevailing recession in market…..it does not necessarily mean a down or lethal situation for investment. Right now, many situation managers are considering downturns as fresh buying opportunities. So definitely you as a potential and willing investor can follow their ways. Some situations manager are even saying that as due to this recent downturn stocks have gone overvalued, naturally very little no. of shares are there to choose from for picking up and the fall has widened the buying opportunities.

1 comments:

  1. Just want to say your article is as amazing. The clearness in your post is simply cool.
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