So are you a good stock picker ? Do you think the buy and hold strategy works ?Yes it might work well and do wonders in bull market scenarios but there is a serious chance of losing all that in a fragile market environment like the one we are facing these days .
What the future hold for us ?
The bad news is that the next few years will be bad for those who worked on the buy and hold strategy . With the natural forces coming into play deflation will be the major reason for a downward spiral in the future market scenario .So the best way to deal with this deflation is to meet it head on . Work on a strategy where the downward spiral works for you and you grow orgnically .With the decrease in commodity prices in global market there are very bad signs of deflation and very chances to grow organically .
So the short invidual stocks are the solution ?While these present a good oppurtunity by there is stil a significant risk.And if you are shorting a wrong industry it will result to a catastrophy .And if by any chance the small company you are shorting gets acquired or bundle up ,you might devalue yourself 25% .
So What should one do ?
Well the answer is simple ,Go for a two point strategy .
First hold the most potential . i,e research the S&P and determine the stocks that have low or high quality and will help you make a balanced protfolio . But keep in mind the health of the industry before chosing this route . So even if you choose the weakest company in the strongest Indutry it will outperform a very strong company in a weak industry .
The other option is to invest in the exchange traded funds or ETFs.But keep in mind that if not experienced please invest in any kind of leverages or inverses ETFs.They come with a expense ratio , i,e they are rebalanced daily and extremely volatile . So for an example a certain leveraged ETF is good at Rs200 it will be good at Rs150 or 140 . If your research is good then this will be the right time to buy the shares rather than panicking and selling them.However most retail investors panic at this stage and strart selling these shares at a throw away prices to minimize the risk .
The Bottom Line
Just go ahead and buy the shares when the market is not in your favour . Fill your basket with as many eggs as possible and stick with the areas of market with will give you the most resiliency /