Does this sound familiar? You are tired because of the current market environment. Most of your holdings are in red, or neutral at best, since market volatility exploded last summer.
You have tried investment services like paid e-newsletters from gurus worldwide, took consultations, read books … but your profitability has not improved, on the contrary.
If this sounds familiar, we can tell you that you are not alone. Many investors nowadays are truly suffering, and they are telling us. There are two trends which make investor’s life quite hard. On the one hand, expectations are set for fast gains (much faster than ever before). On the other hand, central banks have lit a fire below every market, driven by extreme monetary policies, distorting normal market behavior, and causing wild swings in basically every market.
Are there any investment opportunities left in 2016?
Given today’s market environment and expectations for fast / easy gains, the question really is whether there are investment opportunities left in 2016 (and beyond). The answer to that question is clearly “yes”, but one has to adapt its investment strategy. During volatile times, and especially sideways trading markets, similar to the ones we have seen since last summer, investors need to change their investment strategy. Positions should not necessarily be held for a long time, so trading in and out of markets is often recommended. Patience is required, because volatility leads to extremely interesting prices of assets and stocks.
Case in point: 3D Printing
The 3D Printing sector rose tenfold between 2012 and 2014, catching the attention of the masses. In 2014, the sector got into a euphoria phase. At that time, everyone thought that the world had changed because of 3D Printing. Nothing is further from the truth, though, as that type of sentiment typically coincides wtih a peak, right before the sector comes down, which is what happened in 2015.
Meantime, as nobody is paying any attention anymore, and everyone hates the sector, it is starting a silent recovery. That is how it goes: emotions are governing markets. Smart investors, however, grab the opportunities as they arise.
The 3D Printing sector has suffered huge losses in 2015, and, with rising market volatility, the market overreacted. Investors really dumped their 3D Printing stocks. That is the type of investment opportunity that smart investors are looking for. Patience is required, though, and lack of patience is the big problem of most investors nowadays.
Case in point: Gold Miners
Another segment of the market that was so out of grace is the gold mining sector. Now, the tricky thing with gold miners is that investors should not overinvest in them, as they are extremely volatile. Still, adding some positions early 2016, at a time when gold visibly refused to break down, was a good investment opportunity. Again, sharp timing and stock picking would have resulted in considerable gains.
Investment opportunities for the remainder of 2016?
The first quarter of the year has passed, so the question is which investment opportunities we see for the remainder of 2016? Honestly, this is a very hard question to answer, but we believe this strategy will yield excellent returns:
- 3D Printing stocks look really great: they are out of favor but the 3D Printing sector is breaking out (technically). That is an ideal recipe for success.
- Long term momentum stocks are great holdings for every portfolio during sideways and volatile markets.
- Gold looks very strong, though the latest futures market positions were very bearish. A retracement will probably offer a much better entry point, later this year.
- Within the emering market complex, we remain extremely excited about the stock market of India. We have written over and over again that India looks great, and that it is a matter of time until that market will turn very bullish.
Those four segments or asset types offer excellent investment opportunities throughout 2016, according to us. Stock picking, asset picking and timing will be more important than ever before, however.