This morning, I am thinking about The Who (c’mon reach back), the band that penned the famous words, “Meet the new boss, same as the old boss.” I can’t help it. The words are ringing in my head, as I read about the Cypress bailout, the EU financial crisis, the declining euro, and rising European bond rates. It seemed the market was looking for change, a new boogey man to bring it back down to earth. Instead, it reached out to the same old same old. Nothing changes as much as it remains the same, I guess …
- Our ancestors lived in a constant state of fear– their lives in constant jeopardy from the elements, wild animals or climate changes that threatened to kill them. In the modern age, we know that some dangers are still very real.
Dr. Janice Dorn
Yep, in the market world, Europe is one of those fears, and it will continue to be one for years to come, as time is both an ally, and not, along the path of recovery on that continent. Yet even though this is the case, I will tell you that into the near future, this fear will play for a bit and then it will pass each time a new boogey man-child appears (Cypress). Europe and its ongoing financial reality are no longer scary enough to take the market down in any big way. Stick with the plan to play this bull rally for all it is worth …
- People who are financially literate and willing to do hard work and have time to follow the markets can go about building a portfolio made up of their own stock selections and other assets.
The above is one approach to today’s market momentum, and it is a good one if your game plan is long-term investing. Consider the following statement though if you have fears about picking specific stocks for your portfolio.
- Your solution is index ETFs, vastly preferable to picking individual stocks. Lower cost, reduced turnover, fewer taxes — and much less risk.
Another approach to making money in this current market environment is picking stocks and playing the up and down movement. I have been doing this with BofA for so long now I know the stock intimately. This has distinct advantages, not the least of which is the “fear of the unknown” is virtually gone.
- The major fears of traders are based on one simple premise: We do not like to be wrong! We don’t want to make a mistake–and having made one, we don’t want to admit it.
In my little world of trading BofA, my inner strength comes from not worrying about the down movement. I know the stock so well I know when it drops, it will get back on the path of upward momentum, usually in very short order. For me, the down trip is the opportunity to increase my bet or get back in after taking profit. And the more times I am right about that, the less fear I have about being wrong.
Now, the flip side to this confidence building is that when I get to my other picks, the ones I know less well, my cockiness can do me in, and it has recently with other plays.
- Years ago when Futures magazine was first establishing its presence on the Internet, an anonymous contributor called “the Phantom” advised traders they should always expect to lose on every trade. His postings got a lot of reaction – some critical – from other traders. They didn’t get into trading to lose; they wanted to win.
Darrell Jobman
I too trade because I want to win. Check that. I want to make my money work. I really don’t care about a track record of wins and losses. I care about ROI. True, the biggest drain on ROI is losing money, but that happens, and although I don’t expect to lose every trade, I accept that I will lose now and then.
When it comes to trading, the one thing I have found to be most helpful in the winning/losing regard is to win more than I lose. I know, I know, that is so trite, but, trite or not, it is the reality of trading, and it is the only way any trader survives.
Trading is hard work, for sure, but in today’s market, finding market plays that work over and over again is one approach. Perhaps the approaches of investing in ETFs or finding undervalued stocks for a long-term portfolio work for you. No matter, just remember two things. One, fear is your enemy. Find a way to remove it from your market life. Two, this is the market to make money, even if Cypress popped out from under the bed just when you thought you were safe.
Trade in the day; Invest in your life …
