There Are Always Winning Investments

Can you always find a winning investment? What about when the markets are in turmoil either from economic forces, nature’s disasters or political forces?

The answer depends upon two factors: how you define “winning”, and when you want the stock, ETF or fund to produce gains.

When the markets are in turmoil and almost everything is dropping there may be safe havens that can be defined as winning investments. These include: bonds (or bond ETFs and bond funds), money market cash accounts, and high yield dividend paying stocks, funds or ETFs with trong long-term history of always paying their dividends. Winning investments in these situations can also be based on the concept of buying low with the idea of holding the position for a mid to long term measured in years, not days, weeks or months.

While most software programs that provide buy – sell recommendations are based on immediate trends there are a few programs that allow you the option of configuring them so you can pick long term investments or safe investments. You can do this in a variety of ways. One method would be to include a few “safe” type positions in your regular groups so that when most ETFs, stocks or funds are underperforming the analysis will shift towards these safer positions that will then reduce risk while offering modest gains.

Another method would be to create a group of high dividend yielding investments, either stocks themselves or ETFs or mutual funds. By setting the buy rules based on long term investing you would reduce turnover and volatility while maintaining minimum risk with modest gains or income.

Fundamental analysis can also be used to find long term investments. This is the method used by Warren Buffet. This method requires careful study of potential positions over many days and weeks before a buy decision is reached. When the markets are down or in turmoil such analysis coupled with the willingness to reap results in the distant future can bring excellent gains.

Who can best utilize these approaches?

Everyone. Some investors think these approaches don’t apply to them because they want to make money “today” or because they are either nearing retirement or are retired. But when the markets are convoluted putting pat of your portfolio into safe areas is simply a way to reduce risk and maintain your portfolio’s value. Retirees today need to remember that life expectancy is growing and keeping a vibrant portfolio with long term potential is critical.

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