I’ve read all kinds of report about the fate of the stock market. Some analysts say the market will crash, but not anytime soon. But Marc Faber, the publisher of the “The Gloom, Boom & Doom” report, says unchecked bull markets often lead the market to fall hard. A recent article by CNBC that cited Faber suggested the market might be headed for a significant pullback. In fact, stocks could drop 30 to 40 percent. Considering some of the rapid gains in the past 3 years, it wouldn’t surprise me at all. Unfortunately, most of the mom and pop investors are just now getting back into the stock market. With all the turmoil in the country including the problems in Russia and the Ukraine, it seems foolish to go long on equities.
Finding the safer bet
According to Faber, now is the time to get out of stocks. He suggests cash, which is where my money will remain if and only if my stop losses are trigged by a correction. I feel better keeping my stocks with the protection of stop losses so that my position will sell if a particular stock dips below a certain point. That way, if a particular stock continues to go up, I’ll be able to lock in my gains without losing it all in the event of a market crash.
Staying way from bitcoin
I read another CNBC article that cited Warren Buffett who said people should not get out of stocks in response to concerns over the Ukraine or China. Buffett also suggested steering clear of bitcoins. I don’t think anyone truly “invests” in bitcoins as much as they place bets on the virtual currency that is more volatile than most penny stocks. I’m avoiding speculative plays by investing in solid companies that pay dividends.
Placing my covered calls
Instead of waiting around for the stock market to crash and then recover, I’m trying to make some money on my stock market positions. I’ve place several covered calls. If the calls hit the strike price on a certain day, I’ll let go of my shares but earn the difference between my purchase price and the strike price as well as my “commission” for basically renting out my shares. If my stock doesn’t reach the strike price, I’ll still keep my commission as well as my shares so that I can buy more covered calls.
I’m not all doom and gloom when it comes to stocks, but I am not overly optimistic as some people seem to be at this time. I want to make money in the stock market like everyone else, but I’m not willing to risk my hard-earned money with speculative plays or bitcoins. By putting in stop losses, buying covered calls and relying on dividend-paying stocks, I’m going to grow my portfolio in good seasons and in bad.
More from this contributor:
I’m Not Retiring to a College Town
Best Money Moves After College
Knowing How Much Coworkers Earn