We are in the middle of the summer doldrums, and may be near a market correction because some analysts suggest that DOW 17,000 acts as a ceiling preventing further movement upward. Add to this the thought of war in the Middle East, an American economy still just barely bumping along after years of so called recovery, and a Federal Reserve with no new ideas for stimulating the economy. Around the world other major economies show little or no movement, Europe is concerned they might be slipping into recession, and so much more we would need to write a book to explain it all. So what does this mean for picking stocks? In short, the process becomes more difficult. But good stocks are always out there.
A good stock (for retail investors) is a stock moving upward. However, when the market is uncertain, even a company with great potential may do nothing because investors are afraid to risk their hard earned money. Investors sense their portfolio is stagnant or even decreasing in value, and this means they are less liquid (unable or unwilling to take a loss just to risk the same fate in something else).
What I am saying is not new. However, some have PMed asking why this or that stock did little or nothing after recommendations on this board. We simply cannot control the market, and fear is a strongly motivating factor. Many investors simply sell in “May and go away.” These same investors often return toward the end of the year, and their return once again drives stock prices upward resulting in the so called Santa Claus effect. Also, start-up companies typically do better in the first part of the year. So the cycle continues.
If you are a strategist, you might pick stocks at this time of year with a notion of what appears to be great potential, and hold them until March or April of next year with the idea of selling at a profit. Others may sell around Christmas time at the very first sign of profit. Both strategies hold great promise for success, and it is up to the individual to determine what works best for them.
This is my tip for the day. Enjoy your summer, and try to find time for a little play. Life is all too short, and regrets often happen because of things we could have done but didn't. Also, hug your children and tell those you love that you love them. You might be surprised to discover just how lucky you really are.
A good stock (for retail investors) is a stock moving upward. However, when the market is uncertain, even a company with great potential may do nothing because investors are afraid to risk their hard earned money. Investors sense their portfolio is stagnant or even decreasing in value, and this means they are less liquid (unable or unwilling to take a loss just to risk the same fate in something else).
What I am saying is not new. However, some have PMed asking why this or that stock did little or nothing after recommendations on this board. We simply cannot control the market, and fear is a strongly motivating factor. Many investors simply sell in “May and go away.” These same investors often return toward the end of the year, and their return once again drives stock prices upward resulting in the so called Santa Claus effect. Also, start-up companies typically do better in the first part of the year. So the cycle continues.
If you are a strategist, you might pick stocks at this time of year with a notion of what appears to be great potential, and hold them until March or April of next year with the idea of selling at a profit. Others may sell around Christmas time at the very first sign of profit. Both strategies hold great promise for success, and it is up to the individual to determine what works best for them.
This is my tip for the day. Enjoy your summer, and try to find time for a little play. Life is all too short, and regrets often happen because of things we could have done but didn't. Also, hug your children and tell those you love that you love them. You might be surprised to discover just how lucky you really are.
