Wednesday, August 3, 2011

Rebalance when the market sinks.

One silver lining in a crap market is when everything is on sale; you can swap your underperformers for better quality stocks that have fallen with the markets.

One big mistake most make is they become paralyzed by fear- don’t be. Trading that stinker in for something new when everything is down is one of the best moves you can make in a bad bear market.

If you own a retail stock that just reported poorly and you took the pain in a bull market, trade it out and buy a retail ETF that has crashed with the market in general.

Some of the best moves I ever did was selling individual stocks and exchanging them for ETF’s in the same sector when the markets tank. With the ETF’s you get built in diversification to a basket of stocks. If that isn’t enough, some ETF’s distribute dividends; this is a nice bonus if the stock you sold for the ETF doesn’t.

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