With buy-and-hold almost dead and day-trading still too risky, average investors are being forced to use alternative strategies to make money in this slowly recovering stock market.
The result is something of a hybrid in which investors are becoming more flexible and making more short or medium-term trades to reach their long-term goals.
As sentiment grows that the market hit a lasting bottom in March, there's eagerness not to miss any sharp moves to the upside.
"You can't be a trader because that's too dangerous, and you can't be a buy and hold, because things we thought were absolutely safe are broken," says Michael Kresh, president of M.D. Kresh Financial Advisers in Islandia, N.Y. "You have to be somewhere in between. You have to be a conscientious long-term investor, somebody who is making decisions and designing portfolios not on day-to-day actions but on trends."
Investors, for instance, shouldn't pile back in the market because of one day's economic data or ratings change in a particular stock. That's for day-traders, who buy and sell quickly in large quantities and use sophisticated software and strategies to plot their maneuvers.
Though portfolio managers still recommend sticking with goals that encompass a three- to-five-year time frame, the way to achieve them has taken on a new look
"Now is the time when advisors need to be educating clients," says Nadav Baum, managing director of investments at BPU Investment Management in Pittsburgh. "Before, the whole buy-and-hold made sense. But where's the tactical overlay of some of these other pieces you should be buying?"
For Baum, now has been the time to look at some of the stocks that were heavily damaged during the market collapse of the past 18 months.
A company like AT&T serves as a good example. The stock has fallen more than 30 percent in the past year with the rest of the market, but has held steady recently and could be ready for a move higher.
A buy-and-hold investor with a portfolio heavy on mutual funds might not be flexible enough to capitalize on a move higher for AT&T. That type of mentality has to change, Baum says.
"They're hiring people and not laying off," Baum says. "Why don't we take $10,000 of our $100,000 portfolio and buy a couple of these industrial stocks (like AT&T)?"
Other investments that Baum says fall along the same lines include Warren Buffett's Berkshire Hathaway, as well as ETFs that specialize in various commodities. They, too, are cheap and are likely to head higher, he believes.
"Clients are looking for a different way to invest," Baum explains. "And not so much (with) the trading mentality, because that's turning Wall Street into a casino. It's more of, 'I'm still in the game and I need some income flow.' "
Advisers accustomed to using index funds and money managers, though, are struggling in some cases to adjust to the new environment.
"There are a lot of question marks out there. this is why it's both a challenging and exciting time for investors," Mohamed El-Erian, co-chairman of the Pimco bond fund, said on CNBC. "The market is trying to figure it out, and if you can predict it you're ahead of the market."
Bruce Fenton, president of Atlantic Financial in Norwell, Mass., says the current dynamics are "tricky" and has him rethinking some tried-and-true theories.
"It's symptomatic of a real sea-change in the way the investment world works," he says. "The old buy-and-hold notion is kind of out the window. But pretty much every professional working today was raised in that environment."
Foreign markets hold particular allure for Fenton, who is invested in individual companies in Saudi Arabia. Some of the emerging markets are a bit more predictable than the US, where he says over-reaching government intervention has created potential problems for the future.
Still, he is adapting to the new normal, and echoes the sentiment that companies that may have suffered some loss in share value but remain in good cash positions present unique opportunities for investors.
Among those in that category are Cisco Systems , which is off about 25 percent from a year ago but is solidifying its position.
"There is a lot of uncertainty out there and there's not a lot of clear answers," Fenton says. "The throw-it-in-a-mutual-fund and don't worry about it plan is probably not a great plan right now. This kind of massive crisis separates the good investors from the mediocre."
Indeed, Kresh says the need for a mix between caution and opportunism presents challenges investors haven't faced for some time.
"Retail investors should be cautious and should use the opportunities of this market to tweak their portfolios," he says. "But if we get tied up in the day-to-day gyrations, we get back to spinning around on a barstool. If somebody spins fast enough you don't know which direction they're going."