Finance Articles

Senior Market Analyst Offers Five Smart Investment Strategies for a Down Market

(PRWeb) March 22, 2007 -- Most investors have heard the phrase "corrections are healthy" more than once over the past few weeks. And most investors are probably wondering how losing a third of their investment portfolio can be "healthy."

According to Charles Delvalle, senior market analyst for Investor's Daily Edge, "Just because you lost money doesn't mean that investment opportunities have dried up." He adds, "In fact, there are more opportunities today than in the past year. You just have to use smart investment techniques to find them."

Here are five tips savvy investors can use today to help find great, undervalued stock opportunities:

1. Look for stocks hitting their 200-day moving average. Think of this moving average as a line in the sand. If the stock is above this trendline, it is in an uptrend. If below, it's in a downtrend. Look for a stock that has a history of using its 200-day as support. If there is one, wait for the stock to bounce off its 200-day and then buy. Microsoft (MSFT) is a stock that recently did just that.

2. Look for oversold situations in the weekly charts. Finding an oversold weekly chart gives investors the chance to buy into a stock that has already seen a lot of selling and is ripe for a turnaround. The oscillators some analysts use are the 9-unit RSI and the 9,3-unit Slow Stochastic. Stocks showing an oversold weekly chart include Intel (INTC), Google (GOOG), and Silver Wheaton (SLW).

3. Use value analysis when reviewing companies. This is the same strategy investment great Warren Buffet uses. Value analysis allows investors to invest in cheap stocks that make good money and are unfairly hit by a market slump. The best time to find solid, cheap companies is just after a big market drop. Good fundamental criteria to consider include P/E ratios below 12, price to book and PEG below 1.5, operating margins of at least 20 percent, return on equity above 15 percent, and growing profits and revenues.

4. Look for income-producing companies. There's no denying that when the market falls, the best performers are solid, dividend-paying companies. The best of these typically have cash flow of at least 10 percent of their market cap, pay out less than 30 percent of their earnings as dividends, and have a track record of paying consistent dividends for at least five years. Dividend stocks do well because they're perceived as less risky than the average investment. These are companies that are mature and will stick around for years.

5. Manage your losses. Setting stop losses is one of the most important things an investor can do. Keeping losses as small as possible will directly impact how much money is made at the end of the day, month, or year. Stop losses differ depending on your strategy.

"Utilizing all of these strategies the next time you decide to buy a stock accomplishes a few things, "states Charles. "First, you buy cheap so you're less likely to lose as much money during the next market correction. Second, you'll choose investments that help buffer any potential drop in your portfolio. Third, you'll know when to sell if the trade isn't going your way."

For more information and to read the full article, visit Investor's Daily Edge at http://www.investorsdailyedge.com/archive/index.php

About Charles Delvalle
Charles Delvalle is a self-taught market-timing professional and value analyst who uses a combination of technical indicators and fundamental research to achieve consistent gains on stocks, commodities and options. In recent months, Charles has unlocked gains of 90%... 74%... and 45% - all in a matter of days. He also recommended a tiny coal company which rocketed 30% within a month and a disregarded Palladium miner whose stock went up double digits in just days. And when everyone else was talking about gold, Charles was singing the praises of silver... which was up 50% just a few months later. Charles is also a staunch contrarian and takes pride in finding undervalued sectors and discovering great companies on the cheap. He questions government reports and the status quo. In addition to swing trading options, Charles is also Co-Editor of the monthly advisory service, INCOME.

Investor's Daily Edge (www.investorsdailyedge.com) is a free investment newsletter that's delivered by email before the market opens. In each weekday issue you'll receive clear recommendations and practical strategies for protecting your portfolio and multiplying your money - whether the market is rising or falling.

For more information about our editors, or to set up an interview, please contact Wendy Montes de Oca at 561-921-0001 or visit www.investorsdailyedge.com.

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