{"id":25454,"date":"2011-11-21T01:18:53","date_gmt":"2011-11-21T06:18:53","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2011\/11\/21\/market-volatility-and-buy-and-hold-disasters\/"},"modified":"2011-11-21T01:18:53","modified_gmt":"2011-11-21T06:18:53","slug":"market-volatility-and-buy-and-hold-disasters","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/11\/21\/market-volatility-and-buy-and-hold-disasters\/","title":{"rendered":"Market Volatility and Buy-and-Hold Disasters"},"content":{"rendered":"

By MoneyMorning.com.au<\/strong><\/p>\n

Market volatility<\/strong> is here to stay.<\/p>\n

At first glance that sounds like a problem. But, if you actively manage your investments it could be good news. Because you could use the volatility to add thousands of dollars to your bottom line.<\/p>\n

<\/span><\/p>\n

This includes punting on the type of stocks we look at in Australian Small-Cap Investigator<\/em>.<\/p>\n

In fact, we believe high-risk\/high-return small-caps should be an integral part of your portfolio. They’re the perfect way to take advantage of market volatility. For that reason, our publisher is giving away our stock tips for free<\/strong><\/u> for the next 30 days. (Click here for details<\/a>).<\/p>\n

Of course, there is an alternative to active investing. You could be a buy and hold<\/strong> passive investor. But be warned, we’ve got some bad news. If you<\/em> make that choice, you shouldn’t expect to add a single dollar to your wealth for the next five years.<\/p>\n

The fact is, despite what the politicians say the European debt crisis is no closer to a fix than it was last week when Spanish 10-year bonds almost hit a 7% yield…<\/p>\n

Or the week before when Italian 10-year bonds burst through 7%…<\/p>\n

Or last Thursday when the Greek 10-year bond yield hit 29%.<\/p>\n

Because while high interest rates are great for investors, they aren’t so good for borrowers. And right now, governments are big borrowers.<\/p>\n

And that means more market volatility. Not just in Europe, but everywhere. Including here in Australia.<\/p>\n

<\/p>\n

How to Avoid Buy-and-Hold Disaster<\/div>\n

<\/strong><\/p>\n

For the long term buy and hold investor that spells disaster. Because they’ll just hold… hold on to assets that will be worth the same in five years as they are today.<\/p>\n

Take the latest from Super Ratings as reported by the Age<\/em> this morning:<\/p>\n

\"Super<\/div>\n

\n<\/p>\n

Source: The Age<\/div>\n

<\/em><\/p>\n

Those are per annum returns over five years. It’s not just super funds. That’s the type of return most buy-and-hold investors have gotten over the past five years. You’re better off sticking cash in the bank.<\/p>\n

But with real inflation much higher than the official price inflation rate of 3.5%, you can’t afford to just stay in cash. You’ve got to take risks. Fortunately, if you play the market at its own game (volatility), you can come out ahead.<\/p>\n

It involves playing it safe with most of your investible cash while trying to get your timing right with a few carefully selected speculative plays.<\/p>\n

You won’t win on every punt, but if you apply the right risk management strategies… and if you “get it” that the market is volatile, you should be set to make inflation-busting returns from a market that’s going nowhere.<\/p>\n

Cheers.
\nKris.<\/strong><\/p>\n

Related Articles<\/em><\/strong><\/p>\n

Totally Standard Hyper-Inflation<\/a><\/p>\n

Is There Any Upside for Gold Investors?<\/a><\/p>\n

The Gold Bubble and China<\/a><\/p>\n

What a 2,300 Year-Old Coin Reveals About Gold<\/a><\/p>\n

Gold Investing Far From a Bubble<\/a><\/p>\n

From the Archives…<\/em><\/strong><\/p>\n

The Onward March of the State<\/a>
\n2011-11-11 – Kris Sayce<\/p>\n

Lose a Shirt, But Gain a Wardrobe<\/a>
\n2011-11-10 – Kris Sayce<\/p>\n

Neither a Borrower Nor a Seller Be…<\/a>
\n2011-11-09 – Kris Sayce<\/p>\n

Roman or Zimbabwean<\/a>
\n2011-11-08 – Kris Sayce<\/p>\n

Lighting a Match to Inflation<\/a>
\n2011-11-07 – Kris Sayce<\/p>\n

For editorial enquiries and feedback, email moneymorning@moneymorning.com.au<\/a> <\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n


\nMarket Volatility and Buy-and-Hold Disasters <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By MoneyMorning.com.au Market volatility is here to stay. At first glance that sounds like a problem. But, if you actively manage your investments it could be good news. Because you could use the volatility to add thousands of dollars to your bottom line. This includes punting on the type of stocks we look at in … <\/p>\n

Continue reading “Market Volatility and Buy-and-Hold Disasters”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-25454","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/25454","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=25454"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/25454\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=25454"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=25454"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=25454"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}