Stock Market Trading Rules: Collected Wisdom From 80 International Stock Market Experts by Philip Jenks & Stephen Eckett

Author:Philip Jenks & Stephen Eckett [Philip Jenks]
Language: eng
Format: epub
Tags: Business, Personal & Professional Development
Publisher: Harriman House
Published: 2012-01-10T22:00:00+00:00

4. Cash is not trash.

Cash reserves reduce overall portfolio risk in declining markets. But more importantly, cash reserves provide the investor with the ammunition to take advantage of the unexpected opportunities that develop in markets - see the next rule.

5. Market crisis is market opportunity.

Your emotions say sell, sell, sell. But your personal disciplines previously established say BUY! However, if you have no cash reserves, the opportunity is lost.

6. Bonds can be best.

Over the next year, if yields fall to 6%, a 20-year bond now priced to yield 7% will provide a total return of over 20%, twice the historical return achieved by the stock market. What of the risk? If yields rise to 8% instead of falling to 6%, the total return loss from the bond is less than 2%. And, with bond yields rising, the stock market could be down much more.

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