Want to know when to buy & sell stocks? Maybe you should
ask the Fed, as their arbitrary injections of stimulus are pretty well what drives stock prices. We have managed exchange rates, now its managed stock prices....so much for free markets. I used to be a mining analyst, but now I have to read Ben Bernacke's mind to pick stocks. Adds new meaning to trading psychology.
I guess if Ben Bernacke is making stock tips, I guess he is recommending banks. If he gets his ideas from Obama, maybe he also likes hospitals and toll roads.
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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.
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