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Higgins Capital Management, Inc.

Profitable Retirement Investing 5 Contrarian Revelations

Retirement investing is not always about following the crowd or adhering to conventional wisdom. Overlooked advantages and contrarian strategies can potentially unlock significant profits and secure a comfortable retirement. However, these are not for the faint of heart. Insufficient retirement savings may require you to challenge the narrative of slow, steady incremental portfolio growth. But "Know Thyself" and understanding your risk tolerance is imperative. You must be able to sleep at night. With the right mindset and a willingness to challenge traditional thinking, retirement investors may be able to navigate the complexities of the market and achieve long-term success.

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Embracing Market Volatility While most investors fear market volatility, savvy retirement investors recognize it as an opportunity. By employing swing or position trading, investors might take advantage of short-term price fluctuations and potentially increase portfolio performance. Swing trading involves holding positions for several days to a few weeks, aiming to profit from short-term price swings. Position trading, on the other hand, is a long-term strategy where investors hold their positions for an extended period, typically ranging from several weeks to months or even years. These strategies allow investors to capitalize on market volatility by buying during dips and selling during peaks. By carefully analyzing market trends, economic indicators, and company fundamentals, retirement investors can identify opportunities to enter or exit positions at optimal times. Embracing market volatility requires discipline, patience, and a well-defined trading plan that includes risk management techniques such as stop-loss orders and diversification across sectors and asset classes.

Capitalizing on Concentrated Portfolios Concentrated portfolios, sometimes referred to as the opposite of diversification, involve investing in a limited number of carefully selected stocks or assets. This strategy can offer several compelling benefits for investors seeking to maximize returns and achieve their financial goals. One of the primary advantages of concentrated portfolios is the potential for outperformance. By focusing on a smaller number of high-conviction investments, investors can allocate their capital to the most promising opportunities, potentially leading to superior returns compared to more diversified portfolios. This approach allows investors to capitalize on their strongest ideas and benefit from the growth of their most well-researched and fundamentally sound holdings.

Moreover, concentrated portfolios enable investors to develop a deeper understanding of their investments. With fewer holdings to monitor and analyze, investors can devote more time and resources to researching each individual stock or asset, providing them with a more comprehensive grasp of the underlying businesses, their competitive advantages, and potential risks.

Seeking Undervalued Assets "Buy low and sell high" is a proven strategy, and contrarian investors often find success by identifying undervalued assets that the majority of the market has overlooked. Retirement investors can uncover hidden gems with untapped potential, allowing them to buy low and sell high. To identify undervalued assets, investors must conduct thorough research and analysis, looking beyond market sentiment and focusing on fundamental factors such as a company's financial health, competitive position, and growth prospects. By investing in undervalued assets, retirement investors can potentially achieve significant returns as the market eventually recognizes the true value of these investments. Seeking undervalued assets requires patience and a long-term perspective, as it may take time for the market to catch up to the investor's assessment of an asset's intrinsic value. Investors must also be prepared to weather short-term market fluctuations and have the conviction to hold onto their investments even when they appear to be going against the grain.

Challenging the 60/40 Portfolio The traditional 60/40 portfolio allocation of stocks and bonds may not always be the optimal strategy for retirement investing. By adapting to changing market conditions and considering factors such as interest rates, inflation, and personal risk tolerance, investors can create a more dynamic and personalized asset allocation that maximizes returns and minimizes risk. In the current low-interest-rate environment, the fixed income portion of a 60/40 portfolio may not provide the necessary returns to keep pace with inflation and support a comfortable retirement. Investors may need to consider alternative asset classes such as real estate, commodities, or even cryptocurrencies to diversify their portfolios and potentially achieve higher returns. Additionally, as investors approach retirement age, they may need to adjust their asset allocation to reflect their changing risk tolerance and income needs. A more conservative allocation may be appropriate for some investors, while others may benefit from maintaining a higher exposure to equities to support long-term growth.

Embracing Contrarian Indicators Baron Nathan Rothschild famously said, "Buy when there's blood in the streets." This encapsulates the concept of contrarian indicators. Buy when no one is buying; sell when everyone is buying. When fear dominates the market, it may be an opportunity to buy, while periods of excessive optimism could signal a time to sell. By staying attuned to contrarian indicators, retirement investors can make informed decisions and potentially profit from market inefficiencies. Contrarian investors look for opportunities to go against the crowd, believing that popular sentiment is often wrong. They may buy stocks that are out of favor or invest in sectors that are experiencing temporary setbacks, with the expectation that these investments will rebound and generate significant returns. To effectively use contrarian indicators, investors must have a deep understanding of market psychology and be able to distinguish between temporary market disturbances and fundamental shifts in underlying value. They must also have the emotional discipline to resist the temptation to follow the herd and the patience to wait for their contrarian bets to pay off.

Retirement investing is a critical component of securing a comfortable future, and contrarian strategies can offer overlooked advantages for those seeking to maximize their returns. By embracing market volatility, capitalizing on concentrated portfolios, seeking undervalued assets, challenging the 60/40 portfolio, and embracing contrarian indicators, retirement investors can potentially unlock significant profits and achieve their financial goals. However, these strategies are not without risk, and investors must carefully consider their own risk tolerance and financial situation before implementing them. It is essential to conduct thorough research, maintain discipline, and regularly review and adjust positions as market conditions change. Ultimately, successful retirement investing requires a combination of strategic thinking, emotional discipline, and a willingness to challenge conventional wisdom. By staying informed, maintaining a long-term perspective, and being open to contrarian approaches, retirement investors can navigate the complexities of the market and achieve the financial security they desire.

The information contained in this Higgins Capital communication is provided for information purposes and is not a solicitation or offer to buy or sell any securities or related financial instruments in any jurisdiction. Past performance does not guarantee future results.

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