Wall Street Journal’s Market Strategies for the Very Brave

The Sunday version of WSJ has a 6 step guide for the brave (in other words, opportunistic) investor out there.  If you are one of them (or want to make money in the long term), read on.

1. Dump the Dogs.  This must be one of those “never go wrong by saying this” advice because isn’t it true that we should always dump the dogs?  The author points out that in this bear market, get out of industries that are depend on the weakening consumer to reap the tax loss for the year.
2. Be Price Conscious.  Stop paying more than 1% expense ratio on your mutual funds.  This especially sucks in a bear market because you have to pay this even though the fund lost you money!  You can always get a very similar ETF or mutual fund at 0.70% or even less.
3. Be Wary of Technology – Even tech isn’t safe because everyone is expecting company spending to drop in the next 12 months.
4. Consider “Sticky” Firms.  Look for industries that have “sticky” customers and still have the ability to maintain their price.  Managed-care and property-and-casualty insurers could be worth looking at again.
5. Look for Attractive Bonds.  Fear is on everybody’s mind right now and people are dumping bonds as they are afraid that companies will not be able to pay.  He cautions to only look for bonds from companies of high quality though – businesses that aren’t tied to consumer spending.
6. Don’t Jump in Feet First.  The recession could drag on for an extended period.  Don’t jump in and start buying with all your cash even though stock values seem depressed.
7. Tiptoe In.  If the economy stays sluggish, dollar cost averaging now seems like a great bet.  Over the long haul, stock market performances will work in your favor.

Within the article, there were a few recommendations:

• Coca-Cola (KO)
• Teva Pharmaceutical Industries (TEVA) – a play betting that Obama will curb drug costs
• Long-term debt of Verizon
• iShares MSCI Emerging Markets Index Fund (EEM) for those with long term perspective

So, are you brave enough to follow these advices?  Whatever you do, remember to do your own research and take anything you read or hear as only guidelines!

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