In the past few years, investors have faced a number of stock market crashes that almost wiped out their investment portfolios. The stock market crash of March 2008 was the worst. Last year again, on May 10th 2010, the DOW crumbled in a matter of few hours and hopefully recovered by the end of the day.
So, why have these stock market crashes become more frequent in the past few years? The reason is simple. The stock market of 2011 is very different from the stock market that existed a few decades back. Online trading has simply changed the way investor and traders can buy and sell.
With just a few clicks, anyone sitting anywhere in the world can buy or sell stocks in almost any stock market. A conflagration that starts in one market soon spreads to the other markets in the world. This is just a manifestation of the interconnectedness of the global financial markets.
Whatever, billions of dollars get invested by hedge funds, institutional investors and big dogs daily in the global financial systems. This has made the financial markets particularly the stock market highly volatile. The market can change direction unpredictably anytime.
How to deal with volatility? Diversify your investment! How? One way is to invest in mutual funds. But the best method is to invest in the Exchange Traded Funds (ETFs). ETFs give you the benefits of both mutual funds as well as stocks. You get the benefit of diversification just like by investing in mutual funds but unlike mutual funds, you can buy and sell ETFs just like ordinary stocks.
These ETFs are designed to track a market index. So, instead of one stock, you will be investing in the market sector when you invest in a particular ETF. As compared to the individual stock, the market index will be less volatile. So, by investing in ETFs, you are infact reducing the volatility of your portfolio. Infact, ETFs have been called the most revolutionary financial innovation of the past few decades.
Now, the only way to invest in the present stock market is to follow the market. What this means is that enter the market when a mini trend is developing and get out when that trend is about to reverse itself. You can use a number of software, some of which are real good that are available right now in predicting the mini trends in the market. Don't follow buy and hold! Just follow the market and you will see that you will be able to make your portfolio grow safely.
So, why have these stock market crashes become more frequent in the past few years? The reason is simple. The stock market of 2011 is very different from the stock market that existed a few decades back. Online trading has simply changed the way investor and traders can buy and sell.
With just a few clicks, anyone sitting anywhere in the world can buy or sell stocks in almost any stock market. A conflagration that starts in one market soon spreads to the other markets in the world. This is just a manifestation of the interconnectedness of the global financial markets.
Whatever, billions of dollars get invested by hedge funds, institutional investors and big dogs daily in the global financial systems. This has made the financial markets particularly the stock market highly volatile. The market can change direction unpredictably anytime.
How to deal with volatility? Diversify your investment! How? One way is to invest in mutual funds. But the best method is to invest in the Exchange Traded Funds (ETFs). ETFs give you the benefits of both mutual funds as well as stocks. You get the benefit of diversification just like by investing in mutual funds but unlike mutual funds, you can buy and sell ETFs just like ordinary stocks.
These ETFs are designed to track a market index. So, instead of one stock, you will be investing in the market sector when you invest in a particular ETF. As compared to the individual stock, the market index will be less volatile. So, by investing in ETFs, you are infact reducing the volatility of your portfolio. Infact, ETFs have been called the most revolutionary financial innovation of the past few decades.
Now, the only way to invest in the present stock market is to follow the market. What this means is that enter the market when a mini trend is developing and get out when that trend is about to reverse itself. You can use a number of software, some of which are real good that are available right now in predicting the mini trends in the market. Don't follow buy and hold! Just follow the market and you will see that you will be able to make your portfolio grow safely.
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