Sometimes your best best stocks to buy investing strategy is to find the best stock fund you can and stay with it. But “buy and hold” might not work so well in 2014, 2015 and beyond. Stock investing consists of bull markets and bear markets, and the bear may be coming out of hibernation soon. Stocks are the key to making higher returns, but simply buying and holding equities has been disappointing for investors since the year 2000. Most investors lack a clear strategy and the best stock investing strategy for 2014, 2015 and beyond may be simpler than you think. Recent history has shown that sometimes investors need to take some money off the table. It’s all about bull (up) and bear (down) markets.
The time to get aggressive is AFTER a bear market has driven prices down heavily for about two years as in early 2002 and 2009. The time to consider a defensive strategy is AFTER a bull market has sent prices upward for several years (like 5). In 2014, we again hit the 5-year mark… as we did in 2007… when a bear market again took more than 50% from investors for the second time in recent memory. For 2014 and 2015, the best stock investing strategy calls for defense vs. aggressive buying.
This is not rocket science. Think of it as the art of balancing fear vs. greed. Between the two emotions, FEAR is the stronger. It took less than two years for the last two bear markets to destroy 50% or more of the stock market’s value vs. several years for investors to recover from those losses. The best stock investing strategy is not about selecting winners in the market. It’s about timing market trends called bull and bear markets.
I’m not taking about selling all of your equities or equity (stock) funds and moving your money into bonds or cash for 2014 and beyond. We’re talking about the best stock investing strategy for long-term investors here. If you’re heavily into the market, consider taking money off the table. Cut your expose and take some profits. If you missed out on this last bull market – don’t jump on the bandwagon now. Investing is an ongoing process, and your best strategy is to avoid ever taking heavy losses.
Once you’ve taken a 50% loss, you then need to earn 100% on your money just to break even. When you consider those numbers you realize why stocks have been disappointing for investors in general since the turn of the new millennium. Forget about trying to find the best stock in a risky market. Focus on conserving your assets in 2014 and 2015, because a bear market could be coming. Sometimes the best stock investment strategy is to keep some powder dry in anticipation of the next bull market.
Investors tend to be overly optimistic near the end of a bull market, and that could be the case for 2014, 2015. Bear markets are often swift and brutal. Over the long run, successful stock investing is a matter of market cycles. Going into 2014 the market was up five consecutive years for a gain of well over 100%. The best stock investing strategy going forward could well be protecting yourself from potentially heavy losses. There will be another bear market, whether it starts in 2014, 2015 or later. Once it’s well under way, then it will be time to plan ahead for the next bull market. Don’t overreact in any market. Your best stock investing strategy as a long term investor is to buy or sell in increments over time as market trends go to extremes. We’re talking sensible stock investing here, not speculation.