Investing Strategies for a Volatile Market

The continuous bear stock trend in the market that began in 2007 has caused many investors to question the right way to handle their stocks.

Not only should you be mindful of what stocks to buy, but be careful where you put your money in.  How much should you invest in stocks?  And are you focused on the yield or the capital gains?

When finding the right stock to invest on, consider if you are getting it for the yield or capital gain.

When choosing remember that:

• Trailing yields are not set on stone.  The dividend next year is still unknown and may be affected by a company’s business model, innovation, customer service, and even rental rates.

• Share prices may drop and the yield may not be as significant.

• Negative outlook may affect the yield.

Take for example the mining stocks of BHP Billiton and Rio Tinto.  Although there is good value with the mining stocks, investors are in fear that with the declining economy in China will affect the prices of commodity.  It may be better to look into investing on companies that provide services to the miners like Lycopodium and Monadelphous.

Banks now have promising yields because of the “credit boom” as compared to capital gains.  Australian banks began with terrific share prices in 2007 but have not improved since then.  Although earnings are showing a 2-3 percent growth in the future, regulation and the unstable house prices may affect the dividend payout.  Taking the macro approach is best in these volatile times.