Shoes Blog Now

Looking For Certainties — Stock Invest (9)

Investing means taking calculated risks. It involves identifying certainties in the marketplace to minimize loss and maximize gain. If you can afford to lose some money but want to win more over time, the stock market is not a bad place to invest. However, you have to find a good handle first.

Self-discipline
In life, you survive one day at a time. In work or business, you try to do the right thing one day at a time while building the future. This is the winning strategy you should adopt. Luck is not a certainty. Dont bank on it.

What goes up must come down
Gravity exists everywhere. The temptation to cash out is hard to resist because stock certificates are fundamentally worthless papers. Only your dream and greed urge you to hold on to them. Do you really know when the big players will cash out before you do? No, so dont push your luck. You should cash out when you can make a reasonable profit. Another stock opportunity is always waiting when you have the cash to play again.

Play the rebound but don’t guess the bottom
When a stock falls and breaks through the $5 danger level, there is no certainty that it will rebound. The reason is that you are not a major shareholder or a top executive. You dont know what is really happening in that company. So, dont rely on luck to catch the bottom. Wait until the stock goes back up steadily to prove a rebound. The big players will buy first but quietly at the bottom. You cannot compete with them. Let them go first and you catch the coattail. A rebounding stock will take several months or longer to regain its old glory. You have plenty of time to wait and watch before going in. Remember, you can never catch the bottom or the top.

Ride the ups and downs
The upturns and downturns are big players games. How can they profit if stock prices dont change? Price movements are all planned and driven by big players. Id call this game a conspiracy. The ups and downs generally follow the business cycle but always come a few months ahead without you noticing it. Remember, the big guys have to do things quietly first. Then they seduce the small guys to come in to support their ventures. You can only believe the ups and downs when you see them. Then you play them. Learn to ride the waves generated by the big players.

Pauses and reversals
An upward stock takes several months to reach the target price set by the big players. The reason is that the public is slow to move in despite continuous seduction. You must play the stock within that time frame. Else, it will be dangerous. During the upward journey, the stock will often pause and retreat somewhat to let things sort out. This gives you the opportunity to ess and take appropriate action. Always be suspicious about a stock moving up too fast. Its not normal. More important, its not made for you. So dont go in.

The same is true with a downward stock featuring many pauses and minor reversals. You have to be suspicious about any good news. They will tell you the bottom is near and urge you to jump in. Dont be a fool to give them cash in exchange for stock certificates.

Certainties born out of uncertainties
Nature abhors a vacuum. The stock market abhors uncertainties. Stock prices will continue to fall when great uncertainties exist in the economy or a particular industry. The recent US mortgage crisis is a good example. Bank stocks have been falling since August 2007 (with pauses and reversals discussed above). After the collapse of Countrywide, Bear Sterns and IndyMac, and recent worries about Lehman Brothers, who can tell when the next shoe is going to drop? The certainty is that the whole banking industry remains in deep trouble for some time to come. Even the stronger banks like Wells Fargo and Goldman Sachs have suffered big declines. Do you want to guess the bottom or wait a while?

Changes are bigger and faster nowadays
Kingdoms rise and fall, so do companies. Since the early 1990s, we have seen the collapse of communism, the explosion of the Internet and wireless technology, globalization, climate change, and the rise of China. Since 2007, we have seen the surge in oil prices and the renewed attention paid to alternative energy. Think about all the implications for the near future. One thing is certain. Established companies failing to adapt will be wiped out. New companies will be created taking advantage of the new environment. The stock market will become more volatile. This means you must be smarter. The widening fluctuations present greater opportunities for short-term profit, provided that you know how to avoid the dangers.

For further details, please email to stockfessor@comcast.net

Duration : 0:8:43

Technorati Tags: certainties, finance, for, fund, invest, looking, market, mutual, retire, share, stock, stockfessor

This entry was posted on Saturday, February 28th, 2009 at 12:26 pm and is filed under volatile shoes. Follow the comments through the RSS 2.0 feed. You can post a comment, or leave a trackback.