The Dow Jones recovered from 7930s to finish trading last week at 8541 pts. That's a big 600 point recovery - showing just volatile the market is at the moment. All it will take the market to reach a lower level I feel is bad data. We are going through a period of fear, and the only bad figures we have seen so far are bad employment figures, Conference Board Indices, debt, foreclosures. There is still a pile of bad news to come which should depress the markets and confidence.
The implication is that there still seems reason to expect a further 1060 point fall from the Dow Jones. I will attempt to put these numbers in a longer term perspective tomorrow.
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Andrew Sheldon
www.sheldonthinks.com
Investment Strategy
If you are investing for the long term, you still need an investment strategy. Dont be fooled by the rhetoric of fund managers. The reason they advise you to 'buy & hold' is because they dont want to compete with you in sell-offs. Markets and industrial sectors are cyclical, so they demand trading to get the best returns. Fund managers actually cant hope to match the performance of small investors (if you are half good) because they have to manage huge amounts of funds and charge you a fee besides.
MY ADVICE is (i) look at a range of market indices and decide upon what level of correction would give you the justification you need to get in & out of the market. It might be a 5-10% retracement or a break of trend. (ii) Diversify if you dont have an intimate knowledge of the company or management. More than 30% in one company is aggressive.
The Dow Jones recovered from 7930s to finish trading last week at 8541 pts. That's a big 600 point recovery - showing just volatile the market is at the moment. All it will take the market to reach a lower level I feel is bad data. We are going through a period of fear, and the only bad figures we have seen so far are bad employment figures, Conference Board Indices, debt, foreclosures. There is still a pile of bad news to come which should depress the markets and confidence.
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