Commodities are down, stocks are down, the housing market is down. Sell, Sell, Sell!? Wrong. Don’t jump on the bandwagon of sellers and get rid of everything you have just because it’s the in thing to do.
The stock market, although driven in the long term mainly by financial facts like earnings and earnings growth in the short term it’s driven by nothing but emotions. If the chairman sounds like he’s speaking gibberish, the “investors” sell. They don’t know what it means so why not panic and get rid of your stocks until the market comes back around. Then buy.
Sure you could do this, but by the time you know it’s time to sell, it’s probably too late. Unless you can predict what Bernanke is going to say we suggest sticking with the stocks you have. Now of course if you have a lemon don’t hold onto a lemon. But if you know you’re stock, or mutual fund, or commodity is strong and shows room for growth and earnings potential then why sell?
This brings us to the point that you need to know how to analyze financials and have a good idea as to what the long term outlook of that particular asset is going to be. Once you can do this you’ll be welcoming down markets. You’ll want Microsoft stock to get buried and be there to buy buy buy, so long as you can assure yourself that market emotions are to blame for the drop in stock price and not financial outlook.
To do this you have to be able to weed through the emotionally backed news articles and get to the financial articles. We use MSFT as an example because there are a lot of articles out there shooting down the stock because of the delay in launching vista. Is this delay going to cause IBM, dell, and other PC manufacturers to bundle Linux rather than Microsoft with their computers. Probably not. (NOTE: please take this as only an example and not financial advice, please consult a financial adviser as to what stocks to buy and sell).
Our point is, when the markets go down there are deals to be had. Please educate yourself as to what emotions drive prices you’ll be better off in the financial long run.
decide to wish you Thanks. Eugene
