- Written by Andrew Snyder, Editorial Director, Inside Investing Daily
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The market is changing by the minute, making it harder than ever to make a buck. That means it is time to change your strategy.
It was a long trip home. After spending a full 36 hours immersed in the latest alternative investing strategies with some of the best and most-successful managers on the planet, it was time to fly home.
I should have rented a car... or rode a bus.
First, the plane was late getting to the gate. Then nearby storms held us on the tarmac. Once airborne we circled the Midwest a few times as the traffic controllers decided to add some cushion between eastbound flights... more storms.
The 6-year-old kicking my seat must have read my mind. "Why are we flying into lightning," she asked her old man. He closed the shade and answered with a lie.
Getting into Baltimore, we diverted from our flight path once again. A storm had stalled atop the northern fringes of the Chesapeake Bay. From way up there, it looked like a paparazzi free-for-all.
We got where we were headed... eventually.
But we were two hours behind schedule (so much for my promise to be home by midnight), and our final route looked nothing like the original plan. It looked more like a bag of pretzels.
In hindsight, it was the perfect recap for my trip.
For the last two days, we broke down all sorts of alternative investments. Think of them as the diversions from the normal flight path.
Sure, we'd all love to get rich buying cheap stocks and selling them when they get really expensive. But that ain't happening. Not these days.
Instead, we are forced to deal with a go-nowhere market. We fight central bankers. And we get our ankles gnawed on by self-minded politicians.
Just like the 737 I rode home last night... without an alternative path through the storms, we'd crash and burn.
So what are the alternatives? What does Joe Sixpack do if he wants to become Joe Champagne?
I'd love to tell you to ditch your reliance on stocks. These days it would be great to invest a good chunk of your portfolio in things like art, precious metals, land and even wine.
But unless you're already at the top of your wealth game... it's unrealistic.
We're all shackled to equities -- some more than others.
But that's OK.
The key is not diversification of asset classes (that idea is a scam)... the key is diversification of strategy.
One idea is to not just hold your nose and go long. Increase your odds of success by selling calls. In a sideways market like this one, the income from a buy-write strategy is often the difference between winning and losing.
In my weekly alert to Unconventional Wealth subscribers on Friday, I'll break down another valuable strategy. As the gap between econo-dependent and econo-independent companies grows, it is a perfect time to take advantage of a long-short strategy.
An econo-dependent company is one that is getting hammered by global headwinds. We saw a lot of it during the current earnings seasons. Even companies that are supposed to be resistant to slowdowns are losing steam because of the growing malaise in Europe. McDonald's (MCD:NYSE) is a perfect example.
But for every company that's getting slammed by the forces of a global slowdown, there is at least one that's using the situation to its advantage. Right now, that means it is doing business almost entirely within American borders and, the chances are good, they're in the energy industry.
We've got a small company in the Unconventional Wealth portfolio that's up some 30% in the past two months. It's the perfect definition of econo-independence.
If we use a long-short strategy, we buy shares of the companies unaffected by the market's weekly gyrations. And at the same time, we sell short the firms getting blown over by the headwinds.
Done right... it could put 20% gains in your portfolio when the overall market is flat.
The alternative tactics you need to succeed are not exotic.
Almost all of them are simple and easy to implement, yet the herd is ignorant to anything outside the standard path. After all, when was the last time you heard an advisor telling you to change your strategy?
For most folks, it's a long-only world. I say that's why most folks aren't rich.
In the New America, you need a new strategy.
From the Inside,
P.S. Speaking of the New America... are you up-to-date on the latest strategies? Do you have any idea how you're going to combat the fiscal cliff? Or worse yet... a renewed recession?
What you need is a road map. You need a plan that allows you to get to your destination no matter the detours and obstacles along the way. Here's how you get it...