The bear market is here. It’s hard to believe for some. This is not yet a financial crisis, so there’s no need to panic. Successful investing means staying in the game. Our TradeSmith suite of tools can help guard your investments even during this current market turmoil.
Today, we’ll cover a tool in TradeStops and Crypto by TradeSmith that can help reduce your portfolio’s overall risk. Then, in Ideas by TradeSmith, we’ll show you a tool that could help you find potentially profitable investments.
TradeStops & Crypto by TradeSmith
Did you know it’s possible to reduce your portfolio risk with the positions you already own? It’s a fact, and you can do it with our Risk Rebalancer tool. It’s located in the research tab of both programs and functions more or less the same.
To get started, simply select the portfolio you’d like to rebalance from the drop-down list. Then, choose if you’d like to include cash and include dividends (for TradeStops). In our example, we aren’t going to include cash (or dividends) since we’d like to rebalance among the current positions.
Here are our results for a sample stock portfolio.
As you can see, our rebalanced portfolio is more equally distributed among the various risk categories. You may notice that we’re increasing our position sizes in some of the riskier positions. Sometimes we need to do this; it can increase our chance of larger winnings.
You can then use the Rebalanced Results and Change in Holdings tab to see what you’d need to do to achieve the new portfolio risk percentage.
Ideas by TradeSmith
You’ve likely heard the phrase, “buy the dip.” Some investors like to take advantage of market slumps to pick up new positions. Finding the positions that might perform well can be a challenge in bear markets, though. That’s where the Stock Finder can help you.
You can choose the filters in the Stock Finder to find the best stocks for your investing style.
We selected the following filters for our example:
- Stock State Indicator (SSI) Green in an uptrend
- Utilities sector
- Volatility Quotient (VQ) less than 40
- Mid and Large Cap stocks
This filter is by no means a recommendation; we simply wanted to see positions that are performing well according to the SSI, in a sector that isn’t stopped out, and not highly volatile. You should always choose the filters that best suit your investing style.
Our filter returned nine results as of this writing. From there, we can review information for each position, such as the VQ, P/E Ratio, etc., to determine if a position is right for us. Two interesting columns are Newsletters and Strategies.
You should notice that there are sometimes hyperlinked numbers in these columns. If you see a hyperlinked number, it means that the position is in one of the newsletters you subscribe to and/or matches one of our strategies. You can click the number to see which newsletters/strategies the position meets. Seeing that a position matches a number of newsletters and strategies could indicate that others think the position is a good idea.
GDX, the bellwether gold stocks ETF, has been in a rising trend for weeks, even as most other equities are down. And gold itself has been working on a bottom formation since August. You can read Dr. Smith’s thoughts on gold here.
And, as the stock market volatility continues, we know that many of you are relying on TradeStops to help. We know there’s a lot to learn with the program. That’s why we developed an expansive Knowledge Base. It can help you learn all the tips and tricks in the program.
We hope that this week’s Insider Update has helped calm your nerves over the bear market. It is still possible to protect your portfolio (and even find good positions) during market upheavals. All it takes is patience and due diligence.
Before we forget, our offices will be closed Dec. 31 and Jan. 1 so that our teams may ring in the new year with their families. If you need help with your programs during that time, make sure to email us at [email protected]. Our Customer Success agents will be happy to help you when they return. Our offices will return to normal operating hours Jan. 2.
We wish you all the best for 2019. Talk to you next year!
TradeSmith Customer Success Team