“Buy and hold” was once the mantra of Wall Street gurus. They told investors out there to simply buy the companies that they knew and loved, hold onto their stocks for a very long period of time, and finally sell them when they prepared for retirement. The idea was that these popular companies would be worth considerably more at the end of that long journey. This makes for a pretty story, but the problem is that the advice no longer fits with the picture of the modern stock market.
The Rapidly Traded Market
The buy and hold advice often worked in previous decades because the market tended to have a stable and predictable pattern to it. There were some exceptions to this, but for the most part investors could expect their stocks to gain value slowly over time. Now, things have changed dramatically.
First of all, electronic trading is now ubiquitous throughout the market. Anyone from practically anywhere with an Internet connection can trade shares in real-time. They may also purchase alternative style investments such as options or ETFs. Whatever the case is, all of this extra trading (often conducted by amateurs) has made for a more unpredictable market.
Markets have often been dictated by emotions such as greed or fear. Currently, those emotions can spread like a virus throughout the market at the drop of a hat. Rumors or general market gossip often transfers at lighting speed and investors trade on them before confirmation of said rumors or gossip. As such, the markets frequently move in ways that do not make sense with reality. Consider this situation as reported by CNN Money,
Biotech stocks tumbled on Monday after Clinton fired off a tweet about “price gouging” in biotech drugs.
Defending Against Modern Markets
With markets as volatile as they often are, passivity is now a vice. Any investor who wants control over their investing outcomes must seize that control. One way to do so is to sign up for a self-directed IRA account.
Traditional IRA accounts involve selecting from a number of investments hand-picked by one’s employer. While the employer supposedly has done at least some due diligence on these selections, they sometimes still fall short. As such, going with a self-directed approach is more prudent.
Selecting Your Recession Resistant Portfolio
Fears of a recession are high at the moment. The stock market has been on a tear higher for a number of years at this point, but signs point to gloomier days ahead. The economies in China and many other parts of the world have slowed, currencies are out of line, and there are still unresolved issues in the European debt crisis. As such, now is the time to start thinking about recession resistant investments.
A gold IRA investment is the answer that many skittish investors are looking for. The thing about gold is that it tends to trade in the opposite direct of the stock market. As the situation in the stock market worsens, investors seek safe havens of which gold is one.
Gold has a tangible value as a precious metal while stocks are nothing more than a piece of paper at the end of the day. Stocks are a claim to ownership in a particular company, but gold is a claim to the physical metal.
Investing at least some of one’s portfolio into gold has the benefit of giving that investor a hedge against market volatility. It also allows the investor to have a greater sense of control over the investments that he or she controls. It is critical to not leave these very important decisions to one’s employer. Some employers have the best of intentions but still make mistakes by not offering enough choices and control
Contact us for more information on why gold IRA accounts have value in your retirement portfolio.