Earlier this week, I got this email from Money .. I know, it is preaching to the choir, but the way I look at my own holdings in PRWT, I got in on speculation at .0155 and have increased along the way. Every penny up gains me $1000 and every penny down deprives me of $1000, but when we get to $10.00 I will be a millionaire and all of those who ran for the door as it dipped to .088 will be still playing for 10 or 20 bucks here and there ... Anyway, here is what they said ... all credit to Money Magazine, but I happen to agree with them!
Keeping your head in a turbulent market
What not to worry about in today's market
First in a two-part report
Finally, the stock markets closed higher on Tuesday,
after several tough days. But many investment
strategists say the damage isn't over
yet.
"It's not the end of it, because the problems have not
changed," says John Cleland, chief investment
strategist at Security Benefit Group Inc., Topeka,
Kansas. "All we are doing is getting a technical
bounce."
If he's right and the market starts to sell off again,
it will be important to remember that a lot of
investors are panicking for some unfounded reasons.
After all, psychology is an important part of
investing, so you will want to keep in mind what really
matters -- and what doesn't -- when the turbulence
returns. Because you don't want to be one those "weak
hands" shaken out of your equity position for the
wrong reasons.
In that spirit, we have prepared a list of things not
to worry about -- and to worry about -- when it comes
to this volatile period in the stock market. In today's
Money Daily we present the things that shouldn't make
you lose your cool.
Interest rates. With economic growth about to slow in
the second half of the year, the Fed is not about to
tighten rates any time soon.
Small cap weakness. Individual investors continue to
shun the small-cap funds, causing net outflows in many
of them recently. This has forced fund managers to sell
stocks to meet redemptions, contributing to
the slide in small caps. They are now dramatically
undervalued, and will come back sooner or later. If you
have been brave enough to hold on so far, don't sell
now.
Devaluation in China. Many investors worry that a move
by China to lower the price of the renmimbi would spark
another round of devaluations in Asia. It probably
would, but China probably won't, says James Carlson, an
economist with Merrill Lynch. China has vast foreign
reserves of about $140 billion, and little external
debt. It is wary of the inflation that would come with
a devaluation. Finally, you can't short the renmimbi,
so speculators won't be attacking it.
Fund inflows. Lots of money gets launched into the
markets automatically each month through retirement
plans, even if the firehose has recently has been
redirected to bonds. "The money flows are going to
continue to provide a cushion under this market," says
Cleland.
Further Asian stock market declines. These markets have
come down so much, that General Electric now has a
larger market cap ($280 billion) than all of the Asian
markets combined, excluding Japan. If the Korean
market were a stock, it would rank 45th in the S&P 500.
While economic weakness in the region is a big
problem, further declines on top of the already
dramatic losses will have little effect on global
portfolios. (See tomorrow's daily.)
Your losses. Yes, you may be down more than 10% since
the markets peaked earlier this year. But if you are in
a fund that has tracked the S&P 500 index, or Nasdaq,
you are still up 10% for the year. And that's
the return investors normally average for a whole year,
in the long term. The days of 30% annual returns were
nice, but they are probably over. Get used to it. |
