We're in such interesting times in the world - as well as the equity (stock) markets. We have oil plunging worldwide. We have entire governments that have suddenly discovered their policies of dipping into the ever bottomless barrel to support their spending habits are problematical (to say the least)... We have China waking up to discover that they too - are mere mortals... And we have the FED attempting (perhaps) to raise rates.
NOW ADD ---- End of year (December) tax selling and re-positioning. Stocks that are down - tend go down more because people need to take some losses to cover some gains - might as well sell the biggest losers - causing what? More losses...
Some of these "losers" will rebound - as the cash that is taken in from the sales eventually gets redeployed - and the stocks that were sold become "bargains". Funny how that works isn't it?? In the since that - As the shares fall - at some point they become desirable because of price...
What's the point?? The point is to understand and try to make some sense out of it all.... and to prepare yourself to try to buy some of the bargains - if you're a long term investor. The key is to understand yourself and being able to handle the fact that some of what you buy might be still in for some pain and you're just "early" (catching a falling knife). This is why you don't buy a total position all at once. Now - that applies only if you can apply it. Obviously if you're buying 10 or 20 shares - at that level you just buy the whole position. But if you plan to buy 100 shares -- try just buying 50 -- and waiting. Buying the next 50 (or not) after you have a better overall view - and have tested your fortitude and thought process.
I'm personally sitting on a mountain of cash - double what I normally have at any given time - earning nothing - but waiting for the first quarter of 2016 before I even think about buying. There's just so many "events" that are colliding and at times - almost seem overwhelming. This doesn't mean I'm planning on doing nothing - it means I'm waiting for some more clarity and direction. I don't even care if I think the direction is more pain. If that's the case - I'll just buy fewer shares with each buy. I know that I'll never catch the bottom of anything - and I'll never catch the top of anything on the sell side. I'm okay with that. I'm not greedy - I just want to catch "some" of it. In the meantime I'll collect and spend the dividend which - to me - is far more important.
|