Happy New Year! That’s right, 2016 is upon us and the start of the year is a time for resolutions. Resolutions are great, with everyone identifying areas where they might be able to improve themselves, then simply doing those things for the entire year. It’s a wonderful tradition that has resulted in some of the world’s greatest accomplishments.
The Special Theory of Relativity came from Einstein’s 1905 resolution to “come up with better ideas.” There was Bostonians joint resolutions to “save more money” and “drink less tea” in 1773. And who could forget the resolution by Egyptian Pharaoh Khufu in 2560 B.C. to “get end of life planning organized this year.”
That’s right, there’s few problems that can’t be fixed by a simple new year’s resolution. That’s why I’m here to help you out with some resolutions for investors. Simply write these down and stick to them and you should soon see healthy results in your portfolio!
Invest in Biotech…Wisely
Every year, some of the biggest gaining stocks seem to be biotech companies. Typically, it’s pretty frustrating, especially for any investor accustomed to poring over income statement and balance sheets as these companies typically have zero revenue and are routinely losing money. The key is understanding that it’s those companies with experimental treatments that will show solid results in clinical trials.
So, our first resolution for investors is to invest heavily in biotech firms developing treatments that will eventually show results in clinical trials, and then get FDA approval while eschewing those companies with treatments that aren’t going to be successful. Follow this one, and you can make health care investing your friend. Pro tip: invest in these companies before the news of successful clinical trials is released.
Get in on that Hot New Social Media and/or App
A few years ago, SnapChat didn’t exist. Today? It’s worth $12 billion. Heck, Facebook (FB) has only existed for about a decade and it’s already worth more than $300 billion. So why spend time fiddling around with index funds or dividend stocks and their steady returns when you can hit a homerun with one big one?
This year, ask teenagers what they find interesting and then find a way to put your money into that. All it takes is that one “Next Facebook” to set you up well, so make this the year that you find it!
Sell Before Crashes, Buy Back in After
“Buy low, sell high” is the oldest adage out there about the stock market. However, when you reverse the two, you can also have a lot of success. For instance, take a look at the S&P 500 over the last 10 years. In mid-September of 2008 it was at about 1,250. By early 2009, it bottomed out at 683. However, from there it has shot all the way up to over 2050.
So, here’s the thing, why not simply sell your stocks the day before one of these crashes begins, then buy them back when it hits the bottom. You can save yourself a lot of pain, and the S&P 500 has quadrupled in the six years since it bottomed out. So, this year, sell on the day before big downswings and then be sure you jump back in when things are at their lowest point.
Simple Solutions to Simple Problems
New Year's resolutions are a great tradition. Out of shape? Just exercise more and eat right this year! In debt? Make more money and spend less this year! Homeless? Make this the year that you build yourself a house!
And if you follow all of these resolutions for investors, I’m sure you can find your way to success in the stock market in no time!
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer