Tuesday, August 16, 2011

Summer Roller Coaster Ride

Yahoo carried an article from 'The Street' suggesting that the wild gyrations that the market has been making lately may be less serious than they sometimes appear.  Here is a link; the guy points out some similarities to last summer and suggests some possible stabilizing influences that may or may not happen.  Certainly it is reassuring to thing that there might be a logical end to this foolishness; whether it is true or not I have no idea.  I really DO like the last line of the article:  "Although we expect volatility to continue, we foresee a more muted level than last week's market roller-coaster ride and a climb over the months ahead. In general, we advise investors to do what they normally do on a roller coaster: hang on tightly, grit your teeth, scream if you need to, but do not jump off."

It may be beating a dead horse but every investor should understand that the market is no place for money you are going to be needing soon.  The market does have liquidity but being able to sell something doesn't mean you'll like the price you receive.  That's one of the reasons I place as much emphasis as I do on dividend paying stocks; it makes waiting out the market easier if you get regular checks!  It is also good if you have read Benjamin Graham and are careful about paying as little as possible when you are buying.  Needless to say, that can be tough to implement.

Have a good one!


Croft said...

Thanks Don, now I feel better. I think. Maybe...

I have not sold anything for a long, long time. The reason is, living out in the financial boondocks, a sell order can take several days to complete - no, I don't think they have heard of computers - so market timing is impossible in a volatile market like we have been experiencing for a long time now. I just rationalize and think paying the preferred interest on my line of credit is better than loosing a bundle in an ill timed sell.

Anyway, as your author states, there will be an upward trend so my strategy will win in the end.

JoeinVegas said...

Here is a good explanation of what's going on