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credit crunch
investment strategies
opportunists
volatility
adversity
aftermath
What You Need To Know When Looking At Short Term Investment Strategies
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As a general rule, investing should be considered as a long-term game, with most independent financial advisers keen to point out you should be looking to keep your investments in place for at least five years, but there are situations in which you would be looking for more short term investment strategies. The key to this is balancing the volatility and risk of investing in the shorter term with the potential to reap much bigger gains.

There are generally two groups which will consider the benefits and drawbacks of short term investment strategies. There are the opportunists, who will pounce when they see that there is a specific area or sector which they think is undervalued and will soon increase in value, and will invest into that sector, planning to take profits out once that sector has increased in value. There are also those who are planning for expenditure in the near future, but do have the funds to invest before that expenditure is needed.

What you have to be certain of when looking at short term investment strategies is that these plans will be more volatile than planning for the long term, and thus the risks are higher, as you do not have the time for the fluctuations in the market place to balance.

The general rule with investing is that stability and growth is what will make money for investors, but those looking for short term gains often thrive on adversity. For example, if you consider the stocks in BP after the disaster in the gulf of Mexico, banks in the aftermath of the credit crunch, and any company who will have suffered a scandal, there will always be those who will buy up shares in those troubled companies, as they feel that the traders will have traded these stocks at undervalued prices, and that the companies will bounce back, and they can then cash in their investments. This can be very lucrative, but also very risky, as not all companies working through a scandal or difficulty will survive.

Another area that short term investors will look to is disaster areas. Because of the hive of activity that will come from the governments in the case of disasters, particularly in the developed world is the rebuilding process. Companies in this catagory are likely to get an artificial boost as their government invests in reconstruction of that part of the country.

Most important with these short term investment strategies is to know the risk, and accept that risk when considering the investment.


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