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Is it really possible to make money in this market?
Surprisingly, the answer is yes. Despite the market being down more than 10% at the start of this year, there have been a number of winners that have done quite well.
As I have said many times, the current environment is very unique. Nobody has ever seen anything like this. To survive, one must throw out the old playbook and adapt to the new reality.
Gone are the strategies of buy and hold and indexing. In its place is quality stock-picking and a willingness to trade your portfolio. I'm not suggesting market timing or rapid-fire moves in and out of stocks. Instead, go commando on the market. Make your picks on the long and short side of the market and take your money when you get it. You may leave some dollars on the table, but using this approach can deliver profits.
That sure beats the alternative.
To get an idea of what I am talking about, I suggest you revisit my Top 10 Stocks for 2009 and my Top 10 Stocks to Avoid in 2009.
As of yesterday's close, four of the 10 stocks to buy were in positive territory, and nine of the 10 stocks to avoid were down more than the S&P 500.
Put the two together and an investor buying these stocks long and selling the others short would have a portfolio up 15% or more if leverage is used. Now that's how you make money in this market.
If you missed out on the stocks to buy or sell, I am always scouring the markets for opportunities. If you ignore the headlines you will discover some really interesting stories that are worthy of investment consideration.
I recently provided an update to my top stocks to buy and sell, suggesting that some of the stocks to sell be repurchased to close out the trade. Even though these stocks continue to fall, locking in profits made sense to me.
In addition I have some periodic recommendations on the long side. For example, a week or so ago I suggested that it was time to get long Whole Foods Market (NASDAQ: WFMI). After having been a non-believer in the stock, not the company, the time had come to support the stock at these very depressed levels.
The stock was trading for about $11 that day. After drifting lower with the rest of the market, the stock took off on Thursday. On Wednesday, the company released earnings that beat estimates by 15 cents per share.
Whole Foods is proving that it can adapt to the new reality of tighter budgets and fewer consumer dollars. Demand for quality food grown organically is a trend that has yet to reach a peak.
By owning the right stocks during these poor market conditions, profits can still be had. Whole Foods proved the point.
Jamie Dlugosch is a contributor to InvestorPlace.com.
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