The first wave of Baby Boomers are just starting to enter retirement. Over the next 20 years, 76 million people will retire.

Or so they hope.

Since 2000, the US stock market has been in a Secular Bear Market. Simply defined, a Secular Bear Market occurs when successive security prices do not rise above the previous high. The majority of investors are still using strategies such as the modern portfolio theory, to diversify their portfolios.

However, this has not given them their expected historic rate of return. Since 2000, the S&P 500 index has returned an annual average of only 2.45 percent. Hardly the returns baby boomers were hoping for.

So what does this all mean? If $10,000 was invested in the S&P 500 index on 12/31/1999 at the end of 2007 it was worth $11,231.08. A historic annual average of 11 percent would have grown that $10,000 to $23,045.38. Quite a difference.

The Secular Bear Market which started in the mid 1960ss lasted almost 17 years. John Mauldin’s New York Times Business Bestseller, Bull’s Eye Investing, states .”If you invested in the S&P 500 in 1966, it was 16 years before you saw a gain, and 26 years before you had inflation-adjusted gains”.

After the greatest expanse in US economic history (1980 -2000) and back to back bubbles, there is a good chance that this Secular Bear Market will last at least another ten years – or more. 76 million Baby Boomers will either have to save more, work past 65, or find an alternate investment strategy.

One such alternative is the use of a Long/Short strategy. The Long/Short Strategy dates back to 1948 when Alfred Jones, a Harvard graduate and former U.S. diplomat, also known as the “Father of the Hedge Fund”, set forth to try to minimize risk in holding long-term stock positions by short selling other stocks, therefore “hedging” risk.

Today, this can be created by using mutual funds with an active management style. But, the ultimate goal of a Long/Short Hedging strategy is not necessarily to beat the market, but to attempt to minimize the downside risk of being in the market and produce a positive return year after year.

Many individuals have asked me this past week, as a portfolio manager, what I think of the current market. I believe investors are scared by what the US Stock Markets may do next. Below I have listed 5 reasons why we should see the markets rally into the new year.

1. The market is undervalued. The deep sell off in the markets has left many quality stocks looking “cheap”

2. The VIX hit an all time high. What is the VIX? It measures volatility in the stock market. Many investors refer to it as the fear gauge. The higher the number, the greater the fear. A high level is used by many contrarian investors as a buying opportunity.

3. The government is doing everything it can. One of the reasons markets has dropped is due to the lack of credit available. This freeze up of credit hurts business’s revolving credit, keeps homebuyers from getting a mortgage, and keeps banks from giving loans. We are a nation of credit. When the credit market is frozen, the individual consumer has trouble purchasing products.

The Federal reserve as been adding dollars to the credit market to unfreeze it. As this continues to happen, investors will begin to realize that the consumer can continue to use credit on a daily basis.

4. The sellers are going home. Many of the talking heads in the financial media have been saying the Dow needs to go below 10,000 before the market can go back up. Well the Dow just did that. The markets are starting to, run out of sellers. No one wants to sell stocks at this level as they believe the markets will recover.

5. Changing of the guard. For the past 60 years, the Presidential Election has been bullish for stock markets. Typically the sitting President uses the resources at hand to try to put a positive spin on both the economy and stock market. The hope is that good feelings will keep the sitting party in power. As the election is only a month away, we may begin to see more of the positive “spin”

While there are more than a dozen reason as why the markets should rally from here, the above give you an example at what a money manager is looking at.

If you are going to be successful in stock trading, you need to figure out which trading strategy best suits you. This means taking into account your needs and resources, your expectations for return, and your tolerance for risk.

Even factors such as age can have an impact on the decisions you make in stock trading. A few stock trading strategies used today are:

Day Trading – The term “day trader” refers to the fact that stock traders who use this approach buy and sell stocks within a single day, not holding a stock overnight. They make money by capitalizing on short-term fluctuations in the stock market, and avoid the risk of being exposed to changes in the market overnight. You can reduce the risks involved with day trading by sticking with quick, small profits rather than waiting for a stock to hit its peak.

As with all other forms of trading, there are always disadvantages. Day trading is a lot of work; you have to remain vigilant throughout the stock trading day. In addition, since brokers charge a commission on each trade, your gains have to outpace the cost of frequent trading.

Swing Trading – A person who is hoping to make larger trades and string them out over a days or weeks, is called a swing trader. The slower cycle of trades allows for a smaller chance of error, less commission, and the ability to have a greater impact on multi-day profits of swing trading. A swing trader often uses technical analysis to help choose swing trade options that target a greater level of return than the average day trader. However, with greater profit chances comes a higher risk for your trade.

Opportunities for swing trading can often be found using technical analysis. Typically, the aim is for a higher profit margin than that of day trading. Of course, this also means a higher potential level of risk per trade.

Long-Term Swing Trading – If you take this approach, you are basically following the same strategy as the swing trader described above, except that you hold the stocks longer. Trades are usually made over a period of months. You can use this approach to trading when focusing on stock indexes and mutual funds, or through technical and fundamental analysis of individual stocks.

When they concentrate on longer-term, noise that is common in the market can be filtered out of the markets. If you are deciding to look at longer trend, you can consider a slight move against it to be relatively insignificant. Be aware that you should keep track of consistent moves against the trend. This kind of stock trading can provide profits that are greater than other types of trades! Remember that the longer timeframe will yield a greater risk, especially with stocks that may not remain stable. When you use this strategy for trade, you could miss the profits from the shorter-term market swings.

Buy and Hold Trading – The investor that uses this strategy is often one who buys it and holds onto it for years. This type of trader may use a great deal of fundamental analysis before picking this type of trade and understand market sentiment analysis. The profits can be great with this strategy. It usually has few costs for trading when compared with shorter-term methods.

Buy and Hold Trading also known as Buy and Forget trading. These stocks may be bought and held for years. Using the right approach, this can be a lucrative option.