The risks of Wall Street are numerous even in good times, and in a sideways or bear market there are even more pitfalls to avoid. Juggling the charts, the economic data and the earnings of your stocks can be a daunting task, and it’s hard to stay ahead of the game.
But whether times are good or bad, there are a few distinct classes of investments that almost always are trouble for your portfolio.
These stocks might not be obvious trouble spots because they can come in pretty packages or even be disguised as “low-risk” trades. But they can siphon cash out of your retirement fund just as fast — even if there’s not a big headline or macroeconomic event behind the damage.
I like to call these investments “pickpocket investments,” because oftentimes you don’t know you’ve been had until you go for your wallet … then realize it’s too late.
To help reduce your risk and protect your holdings, here’s a detailed description of five types of investments I think could cause serious damage to investors who aren’t on their guard: dividend cutters, low-volume stocks, Dumpster dives, high-frequency trading targets and fashionable investments.
Let’s take a look at each group.