We had a great opportunity to buy up good stocks about 10 months ago, but many stayed out wanting some kind of magical signal to say "now is the time to buy". WPL, CBA and RIO were all down in the 20s! Why didn't many get in then? Just a question for Plantic - what signal are you waiting for? Just remember the market is not predictable and does not need to follow a certain pattern simply because the economic climate of the world evolves on a daily basis.
What if the much loved 'W' pattern finally occurs and then the market tanks straight after? There is never a guarantee for the market to be safe - never in the history of the stock market has there been a safe moment to get in. Once your money is on the bus then you are at the mercy of the bus driver. Who is going to be driving the bus when I wake up? Is it that nice man that is polite and safely gets me and my money were I want to go. Or is that pot smoking, schizophrenic lunatic that scares the hell out of everyone, getting the bus on two wheels around the corners? What about when I want to stop the bus to get off with my stop losses? Sometimes the bus is on the express route fails to stop at all stop losses and just keep going south.
We have just had the biggest rally in probably since the depression. Those who worked it well should be well and truly ahead. A pullback was inevitable and the choices are many such as getting out cold turkey, taking profits or buying up more!
I know I'm going to get hit hard come Monday. But that is the nature of the beast. Since April I have been taking profits in anticipation of a correction. But in the meantime my reduced stocks have continued to climb, much to my annoyance.
The hard decision is whether to get out or not. There is never a bad time to take all your money out. But if you do how would you feel if the market went to 11,000 in 2 months? My tip is to slowly feed yourself into a growing market, and to slowly reduce your stocks during a shrinking market.
No one here knows where we will be in 6 months time. No chart will tell you that. And which economist do I listen to? Go onto CNBC - there's those who are saying stocks will go much higher, and then there are those saying stocks will fall hard. These are individuals with years of studying economics - yet some of them will be wrong.
All I can say is that we are now on a down leg, simple as that. Part and parcel of the market breathing out after sucking in a little too hard for a little too long. The true average will soon show itself up.
As it is now I am shorting the DOW with CFDs. I will stay short and will never get out of the trade until the Dow makes it back over 10,000. Thursday night the Dow went against me by going up to 9960 from below 9800, undoing all the money made. But I stayed in using my stop exit at over 10,000. Last night I set the account to short sell more of the Dow if it hit 9895, but with the removal of that trade if the Dow went over 9935. It worked nicely for me building up my exposure to the falling Dow, making a nice hedge against my falling stocks.
I will stay in the trade while it remains below 10000, or when there is a major reversal signal. That reversal signal maybe a break of the downtrend line. Whatever, the income generated will be mainly to prevent me from panicking prematurely. If the Dow falls to 8000, then the earning made with the CFDs could buy me more shares once the market shows a recovery.
Whatever happens, I must say that share trading is the easiest way to make and loose money, and is the hardest, most toughest thing I've ever had to do in my lifetime. It's not based on logic, or calculations, but much of it is good luck, having the knack to read the market, being able to disconnect yourself from public sentiment and the media, educating yourself as much as you can, and being prepared to stick your neck out when stocks have fallen hard to buy up and to sell out with they are going gangbusters.
