Don’t worry about “why” your investment is falling.
Focus on “what” instead. What is happening now.
Don’t worry about “WHY”…everyone is doing that. Gyrating stock prices are getting swung around by deceptive news headlines, faulty stories — all designed to play on your emotions.
Do we really NEED to know “why?”
If a chart is breaking down, giving sell signals, breaking the all-important support line, giving a relative strength sell signal, etc. Does it really MATTER why?
No. You should sell.
Everyone is searching for clues, answers, reasons WHY the market is falling or where/when the market will hit bottom.
How many times this week will you hear “The market is down today because _____ .”
Just remember, in most cases, they are guessing!
Financial stocks starting breaking down, giving massive sell signals in April-May 2007, nearly a full YEAR before Bear Stearns agreed to sell to JP Morgan for $2.00. By the way, Bear Stearns broke support at $140/share (that’s $138 above the price they agreed to sell at).
And the point?
The point is that no one knew in the spring 2007 WHY stocks were collapsing – or how spectacular the meltdown would be. They just were falling apart, period. All the charts told us is that there were clearly far more sellers than buyers, and that supply was in control. That was all we needed to see.
When there is too much supply (of anything), prices are heading lower. You don’t need the “why.”
So…focus on “what”…like what IS happening now?
People seem to be preoccupied with “what will get the market moving again?” and “when will the bottom be reached?” SImply, when buyers outnumber sellers, prices WILL go up. That’s economics 101.
But unfortunately that doesn’t sell newspapers.
By the way…we may have ALREADY put a bottom in place – a month ago!
{ 0 comments }
March 2009 Stock Market: What Could Go Wrong?
by Thomas Mullooly on March 27, 2009
The stock market has been posting gains the past few days.
After two very tough months to start 2009, what could go wrong?
Plenty, especially if you are focused on just the Dow Jones Industrial Average.
The Dow Jones has many financial-related companies, like Citibank, JP Morgan, Bank of America, American Express and quasi-financial stocks like General Electric and Caterpillar Tractor, which perform extensive lending and financing.
Remember, the financial stocks have led the charge the last two weeks, after Citibank’s CEO circulated a memo to employees announcing the bank did well in January and February. But two months do not make a full quarter, and the banks have posted significant losses in the previous quarter, as mentioned before.
In fact, JP Morgan CEO James Dimon mentioned on Friday, March 27, 2009 that March is shaping up to be a difficult month. And financial stocks promptly swooned, bringing the rest of the market along with them.
What else could go wrong?
On Tuesday, March 31, we will finally hear the final revised 4th Quarter GDP numbers. Remember, one month after each quarter, we get preliminary GDP numbers. Then one month later, we get revised GDP numbers.
Then, at the end of the following month — which is also the end of the NEXT quarter — we receive the final revised GDP number.
The market took a beating on each of the previous two GDP announcements at the end of January and also February 2009. If the number on Tuesday is revised downward, watch out.
We also will receive preliminary 1st quarter GDP numbers (1st quarter 2009) one month from now, at the end of April, 2009. Fasten your seat belts.
{ 0 comments }