Game Plan Through Year-End

"May you live in interesting times." I've now experienced the downward spirals of 1998, 2000-2003 and 2008. The giant sucking sound of markets last week was something that felt a lot stronger and a lot more passionate than the two previous periods mentioned.

Monday's reversal just had me laughing about the absurdity of price behavior in the last six trading days. The majority can't make rhyme or reason of the action, and technicians for the most part are scratching their heads as to what expect next. I've been discussing the past week's behavior with clients in a theme of "Don't get bullish, get opportunistic."

Opportunity lies in picking up those stocks that three to five years out will eventually rebound but pay a decent dividend while you wait. Opportunity also lies in getting rid of those investments that most likely won't survive or become lesser investments compared to peers through this carnage. I believe that while we can't know if we marked a bottom and we can't know how far this reversal will go, investors and traders alike can pick up companies on the cheap, even if for a quick reversal.

The issue at this point for me is less about the financial turmoil and more about earnings uncertainty around the next six to nine months. It's hard to own stocks with this uncertainty, but at yields in many top companies at 6% to 8%, many can afford to wait for clarity. The other major market that I'm looking at is the national municipal bond. A few funds out there offer 8% to 10% tax-free yields while having lost NAV value of over 40% during the last year. While I'm not expecting the muni market to return to glory in the next year, again, 8% to 10% tax-free while you wait makes sense to me.

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Chris Schumacher is a financial trader, speaker, writer and co-author of Techniques of Tape Reading. While Schumacher cannot offer specific investment or trading advice, he appreciates your feedback; click here to send him an email.