When you're suffering losses in your portfolio, it's easy to get caught up in the doom-and-gloom mentality and conclude that you just can't make money in the market.
Yet the best thing about the financial markets is that no matter what's happening, there's always a way to make money somewhere -- if you keep your emotions in check and your eyes open.
Right now, you're hearing a lot of pessimism about the markets. Despite action from the Federal Reserve to help save ailing financial institutions, some think all the Fed will succeed at doing is creating a new asset bubble. Meanwhile, America's debt burden has brought us to the brink of a financial apocalypse. It's enough to make you want to start hoarding food and ammunition.
Don't ignore the good news
Yet beneath all the economic challenges that people are facing, there are opportunities for smart investors. The major indexes are still well off their highs from last year, but that hasn't kept many sectors of the market from shrugging off sluggish conditions and recording strong profits. Consider:
- Despite high fuel prices, railroad companies such as CSX (NYSE: CSX ) and Kansas City Southern (NYSE: KSU ) are getting rich delivering hot commodities like coal and agricultural products.
- With copper nearing $4 per pound, producers such as Freeport-McMoRan Copper & Gold (NYSE: FCX ) and Southern Copper (NYSE: PCU ) have seen their shares rise around 50% from their lows just last summer.
- While financials have hit the skids, cash-rich blue chips like Coca-Cola (NYSE: KO ) and IBM (NYSE: IBM ) have held up well in the past year.
If you don't read beyond the downbeat headlines, you could easily miss out on a lot of similar good news from the stock market.
Looking abroad for profits
One thing many successful companies have in common right now is their exposure to foreign markets -- especially emerging markets. While a slowing U.S. economy would normally spell disaster for commodities prices, strong demand elsewhere hasn't shown any signs of slowing. Although that has exacerbated price increases and brought back fears of inflation, it has also helped support stock prices of multinational corporations.
In addition, global stock markets are starting to look a little more attractive to bargain hunters. The two most populous countries -- China and India -- both saw their stock markets fall more than 25% during the first quarter alone.
Highfliers like Internet portal Baidu.com (Nasdaq: BIDU ) were selling at half their prices from just a few months ago. That much-needed break is exactly what the doctor ordered for those looking for a reasonable entry point to the compelling long-term growth story behind these emerging markets.
Successful investors don't let bad news take them out of the game. While you'll inevitably suffer losses from time to time, down markets are full of opportunities for astute investors who can look past the headlines and see the ever-changing trends in the economy. All it takes is keeping your eyes open -- and some cash on hand, ready to invest -- and you can make money in any market.
More tips on smart trading: