Risk Management 02 (Aug 15 - Dec 25)

[winston]

10 Ways to Prepare for a Stock Market Crash

Looking to hedge a complete and total stock market crash? This list of ideas has something for everyone.

By Lawrence Meyers

Source: Investor Place

http://investorplace.com/2016/01/10-way ... qHy3yp96M8

[winston]

Three Things That Matter During a Market Sell-Off

Most of the time the best sources of financial advice — especially during market sell-offs — are not the ones who claim to have all the answers.

It’s the ones who know how to ask the right questions.

Source: A Wealth of Common Sense

http://awealthofcommonsense.com/three-t ... -sell-off/

[winston]

A Good Risk Management Plan Will Tell You When to Make Your Next Big Move

by TOM GENTILE

Part of avoiding financial advice involves having a risk management plan – a plan that accounts for losses.

And right now, it’s critical to be prepared for a losses. A risk management plan will help you asses your level and risk and will tell you:
1. If and when it’s time to sell
2. If and when it’s time to dollar cost average into certain stocks
3. If and when it’s time to find a new place to invest your capital.

Source: Power Profit Trades

http://powerprofittrades.com/2016/01/th ... g#deeplink

[winston]

Capital controls are coming…

by Nick Giambruno

Source: International Man

http://thecrux.com/capital-controls-are ... rself-now/

[winston]

The Generational Investments to Stay Safe in This Market

By MICHAEL E. LEWITT

Investors should continue to buy gold and silver and save themselves.

Source: Money Morning

http://moneymorning.com/2016/01/23/the- ... is-market/

[winston]

3 Bear Market Hedges to Keep Your Portfolio from Hibernating

We may be entering our first bear market in seven years

Source: Johnson Research Group

http://investorplace.com/2016/01/bear-m ... qbVDyp96M8

[winston]

Three critical ways an offshore bank can protect you

By Simon Black

Source: Sovereign Man

http://www.thetradingreport.com/2016/01 ... otect-you/

[winston]

The Great Unwinding: The real cause behind global weakness today

by Tom Dyson

Source: Palm Beach Research Group

http://thecrux.com/welcome-to-the-great-unwinding/

[winston]

Your First Line of Defense Against Financial Disaster

By Ben Morris

Last month, the benchmark S&P 500 Index fell to a 21-month low.

It's down 8.9% from its May 2015 peak… And its 200-day moving average – which I use to gauge the market's long-term trend – has been moving lower for two months.

We could be in the early stages of an extended bear market. So if you're not managing risk properly, you could have a very tough year…

That's why, today, I'm going to show you where to focus your "catastrophe-prevention plan" to best reduce market risk right now. When you get this right, you not only survive tough times… You set yourself up to thrive.

Let's get to it…

A "catastrophe-prevention plan" is an all-inclusive wealth plan that dramatically reduces the risks to your financial well-being. You should consider this plan every time you make an investment decision.

There are three parts to a catastrophe-prevention plan. The first and most important is "asset allocation." Asset allocation deals with the amount of money you have in various assets. How much of your wealth is in cash? Stocks? Bonds? Precious metals? Real estate?

I wrote a full issue on asset allocation earlier this month, called "The Best (and Simplest) Way to Avoid Financial Disaster." In it, I shared the details of an allocation plan that can work well for lots of folks. If you haven't read that issue yet, read it today.

Two of the best "risk-reduction" assets you can own right now are cash and precious metals…

As other assets fall in value, cash gets more valuable… because it can buy more of the discounted assets. Over the course of this year, we could see more big drops in stocks and bonds. You'll want to have cash ready to pick up bargains as they appear.

Cash reduces the volatility of your overall portfolio, too. This is critical for peace of mind and sound decision-making. Don't overlook the importance of holding a sizable cash position.

Precious metals – especially gold and silver – are often seen as safe havens when markets are chaotic. They've been used for money for thousands of years because they're easily divisible, they're easily transportable, they're durable, they have intrinsic value, and their form is consistent around the world. On top of that, governments can't print them on a whim.

Cash and precious metals are holding up great this year. Cash can buy you about 5.3% more in stocks, for example, than it could have at the end of last year. Gold has climbed 5.3%… And silver is up 3%. The Central Fund of Canada (CEF), which holds physical gold and silver, is up 7.4%.

Allocating your assets wisely will have a far greater impact on your wealth than just about anything else. Dedicate at least a few hours to thinking about it every month or two.

The second and third parts of our catastrophe-prevention plan both deal with individual investments. They are exit strategies and position sizing.

Amateur investors often think only about the big potential gains in exciting, "sure-thing" investments. They'll throw a huge percentage of their wealth at a single idea… And they don't think about the possibility that things could go wrong.

You should always think about potential gains… But first you need to think about how much you can lose. People tend to make the worst financial decisions during chaotic times, especially when they don't have a clear picture of how much they can lose.

That's why you need to plan, in advance, when you'll sell any investment… whether it's profitable or not. For stocks, we use stop losses as our exit strategy. Stop losses tell us when we're wrong or when a position has turned against us. They tell us when to get out.

There are different types of stop losses. You might use a "hard" stop, which you set at a particular share price. Or you might use a trailing stop, which moves higher as the share price moves higher.

Stop losses work hand-in-hand with position sizing…

Position sizing refers to the amount of money – specifically, the percentage of your overall portfolio – that you put into a single investment. And you can only make a smart position-sizing decision after you know your exit strategy.

Here how it works…

Let's say you have a $100,000 investment portfolio and you want to figure out how many shares of Acme Corp. to buy. Shares are trading at $20.

First, you decide you'll use a 15% hard stop on the trade… So you'll sell Acme if shares fall to $17.

Next, you decide how much of your portfolio to risk on the trade. You might think about this as a dollar amount or as a percentage. Let's say in a worst-case scenario, you don't want to lose any more than $600, or 0.6% of your investment portfolio. (This is money at risk… which is different from position size.)

Only now can you calculate your position size… and the number of Acme shares you should buy. It's a simple calculation:

Capital at risk / Stop loss = Position size

0.6% (Capital at risk) / 15% (Stop loss) = 4% (Position size)

Or you can use the dollar amount…

$600 (Capital at risk) / 15% (Stop loss) = $4,000 (Position size)

And just divide your position size ($4,000) by the share price ($20) to figure out how many shares to buy… $4,000 / $20 = 200 shares.

Asset allocation, exit strategies, and position sizing… These three pieces make up your catastrophe-prevention plan, from start to finish.

They're your first line of defense against a financial disaster.


Source: DailyWealth Trader

[winston]

Your Bear Market Survival Guide

By JAMES "REV SHARK" DEPORRE

Source: The Street

http://realmoney.thestreet.com/articles ... _ven=YAHOO