The tone of this thread is that BB is applying his time honored (and hard earned) lessons of the stock market during a period of instability. The "testing of the lows" is one of those rules, and is valuable advise.
Realistically, however, the market is now being controlled much more by the investor's psychological view of the market...not by actual value of the stock. Hong Kong sneezes and the US gets the flu? This is not rational thinking. So now, we are forced to look at how the market reacted during periods of neurosis, and not sound financial judgement. People feel good when the market goes up after a sharp downturn, and they feel good when it slowly goes back down and then comes back up. This gives the investor confidence and the market stays a bull market. Deviate from this behavior, and people can panic.
We just had a downturn, not a panic. That is not to say a real PANIC could not happen. We saw the non-effectiveness of the "circuit breakers". Statistically, we should see a "normal correction". But do not underestimate the volatility of the market.
Until someone can find a little Prozac for this market, I am keeping my money in stocks (not mutual funds or index funds), where I can keep a tight stop order. If the market goes though a "shake-out", my money will be on the sidelines, ready to put back in when that "buying opportunity" hits. Sorry BB, I follow most of your advise, but right now, mutual funds could become mass suicide.
Greg |
