I sat down today and updated my performance and transactions spreadsheet (check out the right sidebar). It is pretty interesting how quickly the market has changed over the last month. With the S&P only up 1.71% this year, I am pretty happy with my current year-to-date performance.
Many of my readers can attest to my recent personal finance binge and the lack of investment posts. That currently does not mean I have stopped trading! I thought I would detail some of the transactions have I been negotiating in an effort to shield myself from this volatile market.
Deal Arbitrage:
I presented several opportunities mergers and acquisitions offer to investors last month. Some privatization deals are particular lucrative to small investors, such as the
MCBF trade. While there are certainly some risks with these trades, deal break-offs and shareholder disapproval, statistically, these trades are pretty sure investments. If you are looking for stable returns in-excess of fixed income investments, these deals are a good place to start.
Aggressive Hedging:
I may do a more formal write-up detailing what hedging means, but for now I will simply explain the strategy individuals can implement in this uncertain market. The idea is simple, purchase a stock you feel is going to simply outperform the broader index, maybe it is undervalued or showing great technicals, and short the index that closely follows that stock. If the broader market goes down, your long position in your stock may fall, but your short position in your index will net positive returns. The reverse strategy can be implemented as well.
In short, risk-adverse investors should look for sure-things in this market environment. In order to appropriate protect yourself from this variable market, I would suggest taking both short and long positions. Good luck and happy trading!
