For over five years now one of the best stock investment strategies has been to simply buy and hold. Is it time for you to consider other investment strategies for 2015 and beyond?
Many long term investors will ignore their stock investment strategies until they start to see their losses mount. Then, when it’s too late, they will sell and ignore the markets until it appears that a new uptrend is clearly underway again. Their timing strategies are based on emotion and seldom work in their favor. Others will focus on finding the best stocks for 2015 (based on past performance) and then “buy and hold”, expecting 2015 and beyond to be a repeat performance of the previous five years.
The best stock investment strategies for 2015 will look to the future. The best strategies will take the past into consideration as well. After all, history shows that all bull (up) markets have been upended by bear (down) markets sooner or later. Bear markets can be both swift and brutal. In 2000-2002, and again in 2007-2009 the market took hits of over 50%. Let’s look at the future first for clues to what the best investment strategies for 2015 and beyond might be.
Corporate profits are the bread and butter of equities (stock) prices. More specifically, expectations for stronger future growth in both corporate profits, and the economy is the issue. Forecasts for future economic growth worldwide are not optimistic. The best stock investment strategies for 2015 will take this into consideration. What if the low interest rates (that have supported world economies and markets the past few years) go up as previously predicted by economists? Higher interest rates work to lower corporate profits and to slow economic growth.
Now, let’s look at the past for clues to finding stock investment strategies that will work in 2015 and beyond. First, if you are holding one or more of the best stock investment picks (best performers in recent years) watch them closely. Many of these popular names are overpriced momentum plays, and when the market’s upward momentum stops, history shows that these can be the big losers. Second, we’ve just had five up years in a row and the market has more than doubled in value. Unless you’re a true optimist, consider cutting your exposure to equities or equity funds if you own them.
Review your portfolio. Your allocation to stocks (like in your 401k) may be higher than you think due to the recent bull market. If so, reduce your exposure so it’s in line with your comfort level. Sometimes the best strategies involve aggressive buying. This is not one of those times. Do not try to play “catch-up” in 2015 if you missed out on this bull market. Stocks are not cheap. Wait until they get cheaper.
The best stock investment strategies for 2015 and beyond will require both patience and planning. Sooner or later bad news will usher in a new bear market. Pay attention and be prepared to take advantage of future buying opportunities. Don’t worry about picking the best issues as prices fall, and don’t be in a hurry. Timing and increasing your holdings over time will be the key to the best stock investment strategies if prices plunge in 2015 or 2016.