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How Should You Invest in 2010?

Stock-Markets / Investing 2010 Dec 03, 2009 - 04:00 AM GMT

By: Andrew_Abraham


Best Financial Markets Analysis Article2010 is fast approaching. I have had conversations with colleagues..and the issue that was brought up so many times was 2007-2009 just a fluke or the beginning of something more serious. As usual… I told them to their discern I do not know the future. However in all reality… if we ran our personal households how the central banks and banks ran their portfolios we would be living on the street and I feel there will be a price to pay.

The real problem throughout the world is debt, both Govt debt and personal debt. The reality is both the borrowers and the lenders have a serious problem. The borrowers can be wiped out… but what will the lenders do with anything from worthless debt or run down real estate?

More so the fact,there are starting to be shortages of basic foodstuffs could make for scary headlines. The fact is India has imported rice for the first time in I do not know how long. There are droughts stretching the globe. This is a fact.. not a headline. Argentina is not exporting soybeans. What does all of this mean?

I believe we are in a period… not to see how much we can make… but rather how much we can protect! Not a return on investment…but rather a return of investment. I am not implying to freeze and do nothing. Even leaving your money in the bank you can lose money due to inflation…. Even thinking about putting all your assets in gold you can lose money. Anything can happen. Gold can go to $4,000 an ounce or $400. One must really believe anything can happen…

So how should you invest in 2010? I think the word is cautiously and with a plan. This is how I explain to potential clients. Everyone wants to find someone who has the answer…That is why they watch CNBC or Bloomberg thinking some expert will tell them something that is a secret. Well in reality that will not happen. The key this year as well as all other years is to diversify …be cautious…be realistic…and have a plan.

In my personal opinion…I feel the safest place for my money is in trend following strategies over a large basket of interest rates, currencies, commodities, stock indexes, energies etc. Further more I spread out my assets with NEVER more than 5% in any idea ( even the trading programs I do in our commodity pools and trading accounts). I believe in allocating to other commodity trading advisors who understand risk…have a plan…that are disciplined…and patient..In this manner I am not predicting anything rather attempting to make myself available for any outcomes. What is the best aspect of commodity trading and trend following is the liquidity…( I can liquidate my whole portfolio with in a minute or so) as well as liquidate my managed accounts very quickly…transparency as well as the regulatory that Hedge funds do not have.

The problem is people think commodity trading is risky. More so I have seen this all too many times..They allocate to a commodity trading advisor when they have a good run…and then leave when there is a draw down. This is completely the wrong idea if someone wants to compound their money or use their money as inventory to make more money.

So how should you invest in 2010? Ask yourself really what changed…

Did the banks write down all their losses..NO!

How is the rate of employment? I do not need to answer!

Have foreclosures stopped?

2010 should be time of being aware of the risks that can plague you! Consider allocating some of your portfolio in trend following and managed futures. Learn about managed futures and trend following.

Andrew Abraham

Andrew Abraham has been in the financial arena since 1990. He is a commodity trading advisor and co manager of a Commodity Pool. Since 1993 Andrew has been a proponent of quantitative mechanical trading programs. Andrew's major concern is not only total return on investment but rather the amount of risk that one would have to tolerate in order to achieve returns He focuses on developing quant models that encompass strict risk adherence and correlation. He has been a speaker at conferences as well as an author of numerous articles. Andrew has spent years researching ideas that have the potential to outperform indices as well as maintain fewer draw downs.

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© 2009 Copyright Andrew Abraham - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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