Is your retirement strategy dead?

Investing principles never change. There will always be a market for "buy low - sell high". The strategies intended to produce those results though are always changing.

What if your investment strategy should be fed to the fishes?

A good investment portfolio should contain strong performing diversified assets including stocks, bonds, mutual funds, managed futures accounts, alternative investments, REITs, and anything else that is working for you.

Many common investing strategies are applying principles that are clearly outdated. Others simply violate one side of or both of the rigorous "buy low - sell high" doctrine. Let's look at the most common practices used by investors.

1. Play it safe

Gold, bonds, dividend-paying stocks, and other have been "safe" returns for investors for a lot of years. However, even some of the safe performing investments like health care were not immune to the effects of 2008. Even with safe investments, timing the market is important and no one really knows for sure what's coming next. While safe investments are nice, it's not really buying low and "selling high" is a relative measure.

2. Price Arbitrage

Some investors capitalize on discrepancies between exchanges and current valuations. It's a very small gain process but can be somewhat profitable for certain investors. While it can certainly produce some profits, it's generally not a "sell high" type of investment.

3. Buy and Hold

The idea behind buy and hold investing is to buy and hold stocks that should ultimately appreciate in the long haul. The problem is that small gains are made this one since it's extremely unlikely that a stock would be undervalued for years at a time. Investing doesn't mean buying retail value investments and thus it fails the "buy low" aspect of investing.

Properly Evaluating Risk in Your Portfolio

Risk is defined as "the standard deviation of the historical returns or average returns for a specific investment." In a more practical sense, this "volatility" is a measure of a stock to deviate from producing steady consistent returns over a period of time. Different time frames can add confusion to this metric. It's important because sticking with the basic motto of "buy low - sell high", in a depreciating market, many investments simply fail this test.

In fact, one of the biggest reason that these investment strategies can be flawed is that the are designed to make money in an expanding market. Unfortunately, when the market does not cooperate, they are subject to extreme fluctuations in their investments. Look at what happened to the stock market crash in 2008 and how many investors lost their shirts in the process.

How to overcome market volatility?

With most of these assets designed to take advantage of an appreciating market or to produce rather vanilla steady returns, it can be a challenge. However, there are many investments like futures and options that are actually well suited to profit in a declining market. In fact, during this type of market, it's a wise plan to change your game plan. A good balanced portfolio typically contains about 20% futures but more aggressive markets require for quick reactions.

The reality is that if investors don't adapt and change to the market, it's going to cost them. The simplest method is to keep a balanced portfolio in any market. However, be ready to make adjustments on the fly. When the market dictates it, it calls for adjusting those ratios. Don't be afraid to step outside the norm and make your portfolio a profit producing machine. Your retirement may depend on it. Make sure you invest wisely in your future.