Archive for the 'Bear Market Strategies' Category

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.

The market is going down no matter how bad you want to deny it. Commodities are selling of, gold in particular, stocks are moving back below 11,000 and the housing market is seeing it’s share of downturn. Most people who look at this type of market see nothing but bad news and want to get all their money in a savings account ASAP.

Those people are also the people who think investing is risky and buy a lot of poster child mutual funds. People can win in a down market, and most of those people are the rich. Not because they’re rich, but because they know what to invest in. They’ve learned over the years, taught themselves, taken their blows and can now come out smelling like roses no matter what way the market turns. The trick they have is they took the time to learn how to invest and took the risk out of investing in an up or down market.

You’re probably now saying, “But I don’t have time to learn to invest in all those rich investments.” Well you’re reading this and probably 20 other blogs and financial advisement sites out there so I say bully to you. The problem is you may not know where to look or what to look for. It’s a big deal sifting through all the crap that’s out there especially on the internet but we’re going to give you a couple places to start looking.

First off, we find Yahoo Finance to be a great resource. On their homepage they usually have featured articles from investing guru’s like David Bach, Suze Orman, and Robert Kiyosaki. Start here and begin searching the archives for articles about what to do when the market goes south. We found this article to be a helpful starter, are looking for, DEALS. Some stocks are dropping based just on speculation and investors (aka gamblers and speculators) worries. Look for the deals and look for stocks that are slowly becoming great deals.