Be calm, be smart ---
Wildly buying and selling stocks in the face of a volatile market without any clear-cut direction is a losing game. Besides, who wants to sit in front of a computer all day chasing 1-2 point swings. Only people who will get rich at this game are your brokers.
Be smart, by doing the following:
(1) have a Watch List of stocks you have researched, are comfortable buying and holding, and have tracked long enough so that you have an idea as to what a good entry level is for buying.
(2) When a stock you're interested in hits your level, buy a partial position (1/3, 1/2, etc.). Add if it rises or drops another 10%; you will either partial dollar average if it drops or you will add at an early point after you caught the precise bottom as it rises.
(3) Do not be concerned if it drops another 5-15% after you've bought it. You can never catch the precise bottom and as soon as you sell it, it will bounce back 5-10%.
(4) Remember: the fundamentals of the overall market are intact and, over the next 6 months, should provide nice returns for stocks with solid earnings. Inflation is low, the number of earnings warnings are limited (and, from what I've seen, involve mostly Old Economy stocks, retailers and minor tech stocks, SCI being the notable exception). Even rising energy and oil prices are (IMO) probably factored into the market.
This is the usual combination of September jitters and Early Warning Season. The market will regain direction in early October, the stocks you've bought at "The Nice Price" will appreciate, and you will make money in the market with a minimum of anxiety and hassle.
Sometimes, with regard to trading, LESS IS MORE! |
