When stocks are trading higher and lower and you think you can’t do anything about it, just wait.
Here’s what you need to know.1.
The market is trading higher on its way to its highest point in nearly a decade.
The S&P 500 index is up 7.5 per cent this year to an all-time high of 6,914.50, which is still the most-watched index on Wall Street.2.
It’s been a wild ride.
Investors have poured money into the market as investors flock to the safest stocks, which means stocks are higher and higher, at a time when the market is being battered by the recession and a slow-moving economy.3.
It could be worse.
Investors are betting that the Fed will raise interest rates again next month and will begin winding down the $4.7 trillion balance sheet of the Fed, which would cut into demand for government bonds.
That could put more pressure on the U.S. government to raise taxes or borrow to pay for its spending.4.
And you could have a market crash.
The U.K. has already experienced one major market crash, and a stock market collapse in China is already shaping up to be a nasty shock to global markets.
“The risk is that the next market crash is going to be even worse than the one we have seen this year,” said Jefferies analyst Robert Hwang.
“The market is currently doing so well, and the fact that the stock market is continuing to rise is very good for the economy.”5.
It will take more than a sell-up.
Many investors are betting the stock markets will stay higher than they have for months.
The Dow Jones Industrial Average is up 13 per cent since the start of the year, and S&s average is up nearly 25 per cent.
“It will take some time for markets to recover from the massive sell-ups we have experienced in the past,” said Jana Shashikumar, head of fixed income at Wells Fargo Wealth Management.
“A sell-down of this magnitude is really difficult to overcome, so I think it will take at least a few weeks to see the market stabilize.”6.
But what if you buy?
Investors are still waiting for a stock that will put a positive spin on their financial woes, and they have been spending big money.
Investors will buy about $2.8 trillion in stocks and other assets next year.
So far, investors have spent $2 trillion.7.
They will want to avoid it.
Investors who want to buy in and buy big may want to look at ETFs, which have been the most popular way to diversify into stocks over the past several years.
ETFs trade like stocks and invest in companies that are actively traded, but they do not offer the same level of risk-free cash flows as stocks.
Investors are buying into ETFs for two reasons: the U,S.
Federal Reserve has cut interest rates, and it is selling bonds, which will put more demand on the debt markets.
ETF investors are also paying less in taxes.
“They are buying stocks with a lower tax rate, so they are going to pay less tax,” said Shashiks.
“And the U of C, they are also doing some bond-buying.
That has given them an opportunity to make a lot of money.”8.
It can happen at any time.
If you are ready to take the plunge, it will happen within the next two years.
The next wave of investors will start buying shares in the next few weeks, and many will do so without having invested at all.
Investors that want to trade immediately can buy stocks with cash flow or bonds.
“When you buy in, you are not buying shares,” said S&am’s Hwang, “you are buying bonds.
And that is the way you should go.
You are not going to get the same cash flow.
You need to buy bonds with cash flows, because you are paying less tax.
So it is not a good idea to buy at the top of the market.”9.
What to do if you have stock in the market that is down?
If you own stocks that have been down for weeks or months, it is possible to take advantage of the sell-out by selling them for a profit.
But it is a risk.
“If you do it, you should wait a few months,” said Hwang before he sold the stocks.
“You will have to wait until the sellout has passed, and you can buy them again, because the market has a way of slowing down.”
If you want to take full advantage of a sell, consider trading on the OTCQB exchange.
The OTCQX platform is a stock exchange where you can trade your shares on the market and buy and sell them at the same time.
The exchange is open Monday through Friday from 9 a.m. to 7