Financial markets have been turbulent throughout the entire year. The Dow is up 500 points one week and drops 500 points the next. Real estate prices are still in the toilet as homeowners wait for a recovery. The bond markets are surging as investors appetite for buying debt has returned. So, what can you do to navigate these topsy turvy markets?
Here are 5 moves that you should make right now.
1. Buy Real Estate.
Investors are fearful of buying real estate because they have seen housing prices drop 30 to 40% in many markets around the world. They are afraid that the prices will drop even further. This is a great sign that a bottom is forming in the real estate markets. You can get a great deal on many residential properties right now. As Warren Buffett advises, “be greedy when others are fearful.”
2. Buy Blue Chip Dividend Paying Stocks.
The market crash of 2008 has left many investors feeling burned and not wanting to take chances with stocks. Investors are running to the safety of bonds despite their low yields. Now is a great time to buy stock in cash rich blue chip dividend paying stocks with high yields. You can get yields ranging from 4 to 7% right now in the market. This is a lot more attractive than the 3% yield that 10 year U.S. treasuries are giving.
3. Buy Put Options.
If you are currently invested in the market and feel nervous about stock prices, now is the time to buy some protection. Put options will protect your against a market downturn. Buying put options is cheap and will keep you from tossing and turning at night.
4. Sell Gold.
Gold has rallied a long way and is trading near its all time high. Gold is no longer a bargain at $1,200 an ounce. Remember that gold is a commodity like oil and natural gas. Speculators drive the price up during times of crisis and panic. Then the price drops when the economic outlook improves. You don’t want to be the only person without an exit strategy when the music stops playing.
5. Avoid United States Treasuries.
There is clearly a bubble forming in the United States bond market. Investors are piling into Treasuries in record numbers as they flock to safety. The yields on Treasuries are terrible with investors getting nothing for their money. With the government running up huge deficits, it’s only a matter of time before Treasuries will have to offer higher rates to entice investors. Investors that have been buying long term bonds paying out low interest rates will see their bond prices fall.