Surfing the Waves of Wall Street.

by Natalie Pace.

As I write, on March 28, 2012, the Dow Jones Industrial Average is down over 119 points. Not much reason to worry, however, because this is just yet another wave in the ocean of our global economy. Tomorrow the Bureau of Economic Analysis will release their third estimate of GDP growth in the 4th quarter of 2011. The final report should come in near 2nd estimates of 3%, and, when that occurs, headlines will boast of the recovery and the markets will rise again.

Today's tsunami of worry over the "tepid" durable goods report will become a swell of optimism that the worst is behind us tomorrow, not because that is the complete story, but rather because headlines are full of hyperbole. Really, really bad or very, very good news attracts more eyeballs than a sober analysis. However, knowing how to surf the waves of Wall Street will bring you a lot more joy than worrying about every headline that you come across, so do keep reading!

It is not just headlines that are fueling the massive waves on Wall Street. A few weeks ago, Liz Ann Sonders highlighted how high-frequency trading (computerized trading involving multiple large transactions at supersonic speed,) now accounts for 50-75% of the trading volume on Wall Street. HFT is adding power, height and speed to the waves generated by headlines.

And that might be enough to make you think the waves are just too dangerous, or the waters are too shark-infested, and you're best to stay on shore where it's safe. And that would be a costly mistake.

While we cannot ignore that there are downturns and recessions, the overriding truth is that Wall Street is made of lots of companies -- many of them make the products you most love. In fact, the biggest gains on April 28, 2012 came to a small organic, natural food company called Annie's Inc (symbol: BNNY). And, just like there are many ways to enjoy the ocean -- from wading, to body surfing to tow-in pipelines -- it's really quite easy to protect yourself from the big waves, while enjoying the wind at your back feeling of compounding gains.

You know how the credit card companies compound your debt? Imagine if you were using the power of compounding to beautify your bottom line and increase your assets! Here is a 10-step plan to do just that.

1. Pay yourself first.
2. Adopt the Thrive Budget.
3. Buy a Home.
4. Consider a Health Savings Account.
5. Keep a percentage equal to your age safe.
6. Overweight or underweight based upon market conditions and/or risk tolerance.
7. Diversify your "at-risk" investments.
8. Rebalance 1-3 times annually.
9. Get Financially Literate.
10. Limit your exposure to companies, municipalities and countries that are drowning in debt.

And here are a few more details...

1. Pay yourself first. Deposit 10% of your income religiously into a tax-protected "retirement account," such as 401k, IRAs, Health Savings Accounts, etc.
2. Adopt the Thrive Budget. 50% to Thrive and 50% to Survive. This works much better than the Buried Alive in Bills/Struggling to Survive Budget.
3. Buy a Home. If you are struggling to keep a home that you purchased at the top of the market, then points one, two and nine need more attention from you. If you have a home you can afford, consider refinancing to lock in the lowest interest rates homeowners have ever known!
4. Consider a Health Savings Account. Cut your monthly medical insurance bill and save that money for retirement (or in case you need it for a deductible or co-pay). This works best for healthy people who can purchase a high-deductible health insurance policy.
5. Keep a percentage equal to your age safe. Keeping enough safe means that when the markets drop, you are buoyant. As an added bonus, the safe side usually performs well in bear markets.
6. Overweight or underweight based upon market conditions and/or risk tolerance. If you are nervous, by nature or because the economic climate is foreboding, overweight a little more safe.
7. Diversify your "at-risk" investments. Have small, medium, large, value, growth and a few hot industries. Don't be all-in on any one style, size or industry. If your plan doesn't have enough flexibility, look for a 401k provider or brokerage that does. On big fund can't do it all because you can never see or capture your gains.
8. Rebalance 1-3 times annually. At least once a year, you need to look at what you have in your brokerage account and rebalance it according to points 1, 5, 6 and 7. You are a year older. You have more money from your deposits, and, perhaps, from market gains, too. And what's hot next year could be very different from what was on fire last year.
9. Get Financially Literate. Do you know the average annual gains of real estate, gold, stocks, bonds, etc.? If you did, you wouldn't be caught up in the boom and bust cycles that bury novice investors, and you could apply your wisdom to profit on buying and selling opportunities.
10. Limit your exposure to companies, municipalities and countries that are drowning in debt. By now, you've heard of Greece and may even know about PIIGS (Portugal, Ireland, Italy, Greece and Spain). What you may not know is that excessive debt is at the core of the problems in these countries. The belt-tightening needed to fix the mess is just as hard for countries and companies as it is for you in your own home. However, that's a problem for the elected representatives to solve, not you as an investor.

Read more about these strategies in my book You Vs. Wall Street. Design and implement a plan that will work for the rest of your life at my July 6-8, 2012 Living the Rich Life Retreat. Call 310-430-2397 now to learn more. Only a few seats remain available.

About Natalie Pace:
Natalie Pace is the author of You Vs. Wall Street and Put Your Money Where Your Heart Is. She is the founder and CEO of the Women’s Investment Network, LLC (a global financial news, information and education site), where she has been adding a splash of green to Wall Street and transforming lives on Main Street for more than a decade. Natalie is a blogger on HuffingtonPost.com and a repeat guest on national television and radio shows such as Good Morning America, Fox News, CNBC, ABC-TV, Forbes.com, NPR and more. As a strong believer in giving back, she has been instrumental in raising tens of millions for public schools, financial literacy, the arts and underserved women and girls worldwide. Follow her on Facebook.com/NWPace. For more information please visit NataliePace.com.

Please note: NataliePace.com does not act or operate like a broker. We report on financial news, and are one of the most trusted independently owned and operated financial news corporations in North America. This article is intended to educate and inform individual investors, and, thus, to give investors a competitive edge in their personal decision-making. The publicly traded companies mentioned in this article are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies.   Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a long, safe strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable however NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.