|
How to Invest for 2009 and Beyond By Regina Guinn Mutual Fund Alternatives
If you are like most Americans who have a retirement plan through your job (if you still have a job) or you own additional investment accounts, you were hit hard from 2008 – 2009. Even if you didn’t manage your account yourself and had a professional money manager, such as with a mutual fund, you may have still lost 40% or more during the last year.
In their annual reports, many fund managers admit that this market took them by surprise in terms of the breadth and depth of its negativity. Asset allocation, or spreading your investments among several types or classes (e.g., stocks--large cap, small cap; bonds, etc.), which has been a highly touted strategy for the last 15 years, didn’t fulfill either. A review of mutual fund performance from 2008-2009 shows a negative return of 36.96%. If you compare mutual funds, you will see similar trends. You may have thought that this is normal, because all the markets were down and no one you know came out of this unscathed. "The tragedy is that the simplicity belies the reality that none of these formulaic asset allocation solutions can produce plan values that come anywhere near what someone would need for a financially secure retirement," said Elliot Fineman, senior vice president of the Compass Institute LLC, a Chicago-based research firm that studies market cycles according to Investment News.
"It turns out that some wealthy investors decided that their well-heeled, active money managers and fancy financial advisers didn't know much more than they did about making money in bear markets, and they switched from full- service brokerages to self-directed discount brokers -- where they are also less likely to run into the likes of Bernie Madoff" according to Barron's March 2009 Online Brokers Rating. Mutual fund managers are paid by the investors through fund management fees to optimize your portfolio’s performance. Do most of these fund managers still have their jobs? Do you have yours? Do you have your money? "According to a study from Forrester Research, only 45 percent of investors believe their brokerage firm does what's best for its customers and not just its own bottom line - the lowest level in four years" quotes Smart Money. Even target funds which use a preset asset allocation model, depending
on your investment objective are not immune from criticism. According to Generation X Finance,
"Sen. Herb Kohl, D-Wis, chairman of the Senate Special committee on Aging
is leading a congressional probe into target funds. The SEC is also looking
into the matter. They are considering increasing governmental oversight or even
restrictions." Target funds have become an increasingly popular
vehicle for investing for retirement and for college. When even target
funds are under fire, it is time for investors to take control of their own
finances.
Trillion$ of profits are lost during major market reversals.
Investing in the stock market is not just about how much money is made, but even more important--how much
money is lost. Will you keep
plowing your investments into something that is going to take 1/2 of it away
every few years? With every major failure, one must step back and ask if
something could have been done to avoid this and if there’s a course of action
you can take to improve your investment performance in the future. The
answer to both questions is Yes. Personal finance investing can be
made profitable when investors trade their own stock portfolios. Many investors have begun to look at trading their own portfolios on a
frequent basis, also known as active trading or swing trading as an alternative
to mutual funds. (Day trading is a subset of this and typically involves
buying and selling a stock during a single day, rather than holding it for a
few days or longer.) In the past, it was difficult to make serious money
with active trading because of commissions. For those who place as many
as a few dozen trades a day, the cost of commissions is a significant
factor. As commissions have come down in price due to technology and the
competition between online brokers, active trading has become more feasible for
the average person. Online trades that were once $29.95 for a 100 share
lot are now as low as $3.95 for the same trade. Previously, active
traders spent their entire days developing watch lists (stocks to buy or to
sell short), monitoring their current positions, determining stop and trailing
stops prices to set, and trying to determine the right time to close their
positions. They did this using a combination of tools, such as Level II
quotes, charts, news services, trading ideas, alerts, none of which were actually
integrated into a complete software package that would then place the
trades. Once they selected their stocks, many traders spent weeks trying
to back-test over a similar historical period to see how their strategy would
have fared. Others had programming knowledge that they used to develop
better trading strategies. The technology that was once available only to institutional traders is
now available to individual investors, thanks to pioneers such as Ed Barsano of CoolTrade. (See Ed Barsano at YouTube)
Traders now have many more opportunities to control their financial futures and
are investing for profit with today's much improved stock trading
programs. Some of today's investment software tools are robotic programs
that include the tools mentioned earlier, integrated into a platform that
will select the stocks, determine when to buy and sell, and help you protect
your profits. In addition, real-time strategy simulation is available, an
improvement over back-testing. Sector graphs help traders see beyond the
major indices and into how the sectors are performing on a rolling
timeline. Orders placed in "stealth mode" keep your
intentions to yourself, improving your chances of filling your order at your
desired price. "Convenience is the most important factor driving satisfaction
among self-directed investors regardless of the trading channel used,"
according to the J. D. Power and Associates 2008 Self-Directed Investor
Satisfaction Survey. CEO Ed Barsano says CoolTrade is "Trading
software that you turn on in the morning and walk out of your house. It
picks the stocks. It buys. It sells. It does it all 100%
unattended and it's extremely user friendly. It's the only product on the
market that actually does that. It's all point and click. Anybody
can use this software." The focus during the last few years has been
to improve the software so that more and more people feel comfortable using
it. "If people drove their cars the way
they traded, they'd crash every day" says CoolTrade's Barsano.
However, the CoolTrade platform " Builds on your knowledge and
never violates a rule." The strategies actually come with the
subscription. You can modify them or develop your own from scratch and
many subscribers share their tips and tricks through the site's Community. "Despite a two-month rally that has eased the pain, plenty of
people are rethinking wealth-building concepts they once took for granted,
debating whether to buy and hold, stay in the market, continue with retirement
accounts and more," says Russ Wiles in the Arizona
Republic, Investors Rethinking Old Rules After Losses. Take a look
how several investments and indices fared during the 2008 - 2009 downturn
and Compare Investments
of some active trading strategies employed by CoolTrade investors. Will
you continue to trust fund managers, who can't see a market meltdown, before 1/2 of your money is gone?
Even the simplest CoolTrade strategy saw the stocks go into a
long-term downtrend months in advance, and would have easily taken you out of your losing positions. Enter your
positions into our Buy,
Sell or Hold tool to see what the CoolTrade Robotic Trader would do with
each stock now. A Robotic Strategy executes on its own, becoming your trading
surrogate. It is ideal for those who are just starting to trade on their
own as well as seasoned traders. It applies your rules and logic, removes
the emotions, and flawlessly executes your trades--all through the day.
It gives you the leg up by detecting and analyzing what is happening in the
market not yet apparent to the human eye, then reacting faster and more
efficiently than other traders can. Your trading robot then sweeps in
under the radar, trading at the prices you want and locking in the profits--without
competing with other traders and institutional computers. You can trade
simple strategies "right out of the box" that were developed by our
subscribers or you can get complex with rocket science theories.
Take control of your future by trading your own stocks with
CoolTrade. To see how to rate the features available in a variety of stock trading
programs, read How to Choose Stock Trading Software. During the next market meltdown, who will be looking out for you?
|
| |
|
|
|
| Terms and Conditions |