The Dow Jones Industrial Average today shed 117 points. The reason? A slump in oil and commodity prices and a stronger dollar weighed down energy and material stocks.
Today's Scorecard:
Dow: 17,959.03, -117.16, -0.65%
S&P 500: 2,089.27, -10.23, -0.49%
Nasdaq: 4,992.38, +9.55, +0.19%
What Moved the Dow Jones Industrial Average Today: The markets pulled back after yesterday's announcement by the Federal Open Market Committee that the central bank will not increase interest rates until the nation sees an improvement in its jobs picture and inflation begins to rise.
Oil prices fell again today. The S&P Energy Index slid more than 1.3%. WTI crude, marked in New York City, slid roughly 2% to settle below $44 per barrel. Brent crude, priced in London, cratered another 2.6% to $54.43 per barrel. The declines came on news that Kuwaiti oil ministers said OPEC would be forced to continue production despite crashing prices around the globe. The news comes a day after the Energy Information Administration announced U.S. crude inventories rose for the 10th consecutive week.
Now, check out the other top market stories - plus get our new profit tip for investors:
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Money Morning Tip of the Day: The only thing standing between your portfolio and catastrophic loss is your own caution and proper risk management.
Today's tip comes from Money Morning Chief Investment Strategist Keith Fitz-Gerald:
Risk management may not be the most exciting part of investing. But it is the most important.
And a tool called "position sizing" stands out above all others as the most powerful, and not just for cutting risk either, but for boosting your profits, too.
The concept is simple. Controlling the amount of money you place in each trade can lead to bigger profits and mitigate the risk of a catastrophic loss.
Position sizing is the science of cutting risk in your portfolio down to the bone. It answers the question "How big should I make my position for any one trade?"
Many investors think they have this covered with trailing stops that take them out of an investment when some predetermined limit is hit.
Position sizing is different. It's about determining how much of something you can buy for maximum profits, or even if you can afford to buy in the first place.
Understanding position sizing will put you miles ahead of other investors who spend all their time wondering what to buy while ignoring the critical question of how much to buy.
To learn three different methods for sizing your positions, with step-by-step instructions for each, go here: This One Risk Management Tool Made the Difference Between Bankruptcy and $13 Million
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.