Swimming Against the Current
Right now, during earnings season, many stocks are taking some serious hits. Others are coming out ahead and showing investors that there really are still some bright spots out there. A little bit of economic sunshine could go a long way right now, but perhaps itâ??s time to start bucking the trend a little. Since everyoneâ??s got their money in investments that are slow, boring, but sure things, why not strike out and speculating a little? It can be a great way to diversify the risk factor of an investment portfolio as well as just being plain fun to put money on a long shot with a potential for an extremely high return.
The idea that people get rich in recessions is one that many people donâ??t really see as being true. Investors have made quite a bit shorting the markets for the past six months or so, and thereâ??s really no end in sight. The continuation of last monthâ??s mini bull market into this month is a great sign that recovery is not far away, but people still have their money in the sure bets. Heck, people are still buying investments that they know will lose them a little bit of money but will hold their value no matter what the economic climate throws at them, short, mid, or long term. So right now, there are some great speculative moves that could be made, and nowâ??s the time to do it.
By increasing your portfolio’s position with some speculative stock buys you can be sure that if the economy recovers faster than expected, and you do your research and play your cards right, you stand to make a lot of money from your optimism. Right now there isn’t enough of that, which is a great buy signal for those of you who are daring and brave enough to really sink some money into some speculative plays. Essentially, investors could still remain cautious and hedge their speculative plays with some really boring yet really sound choices as well. Or they could short the market. Perhaps dropping some money into the shorts would be a good plan, even if picking up some speculative stocks are in the works as well. I really feel that investors who are out there to just preserve capital may be diversifying their portfolio when it comes to company names, but they are certainly not diversifying their portfolio when it comes to risk factor.
I wouldnâ??t recommend high-risk speculation to anyone who is near retirement and wanting to preserve as much capital for the next couple of years as possible. But for anyone at least ten years or more away from retirement, high risk stocks could really pay off big in the coming economic atmosphere, once the recession begins to fade and the short sellers are laid to rest. Vice versa may be true for those younger investors looking for a little added security, but at this moment itâ??s never been easier to pick up some speculative plays as long as youâ??re confident of economic recovery in the mid term.
