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Market Update - Risk Management Posture!

The following blog post is an example of a regular portfolio update that subscribers at Natural Selection Self-Investing receive on an ongoing basis. Our real-time stock ETF portfolios are posted on the website along with top trending watch-lists and charts, which allow subscribers to construct and monitor their own portfolios with relative ease.

Dear subscribers, I was just putting together a quick-trade watch-list for the upcoming week but markets have opened in Asia and things do not look good.

Oil (WTI) opened down a whopping 25% and is currently hovering around $33 (20% down). I'd have to check but I'm pretty sure that this is the largest ever one-day drop in the price of oil. The drop in price is due to Russia and OPEC not agreeing to cut production in the wake of the economic downturn resulting from the Coronavirus. It appears that we may even see both Russia and Saudi Arabia expand their production, which obviously does not bode well for oil prices in the intermediate term. I will try to stay updated on the ongoing "tit-for-tat" in oil markets.

Looking at the broad stock markets, Asia is down heavily at the open and North American futures are also down in the 4% range. Needless to say it is not a good idea for all but the most experienced of traders to be looking for quick trading opportunities. Most set-ups are likely to look very different once the market opens tomorrow.

This weekend's developments have me feeling glad that I have hedged our remaining long positions in the stock and ETF portfolios. If we do not get some kind of a bounce, I expect several more of the positions to be stopped out but our sizeable hedge(s) (HIU) will allow us to escape relatively unscathed. The gold mining positions (FNV, ASR, XGD) should also bounce because gold is currently trading around $1700 and has largely benefited from this broad market instability. I continue to believe that being overweight precious metals and other defensive sectors (e.g. utilities), while maintaining a sizeable cash or inverse position, could prove to be prudent moving forward. That being said, I do expect volatility to be experienced market-wide.

In bear markets or times of volatility, it is critical that investors take measures to manage risk and protect their hard-earned gains. Despite claims to the contrary, remaining invested during a bear market can wipe out many years of profits and drastically reduce your investment potential. If you are interested in learning how to construct your own low-cost stock or ETF portfolio, avoid losses and even prosper during bear markets, consider subscribing for less than a dollar per day!



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