Is today doom and gloom or is it a day for the bulls. I’ve lost track. I know one thing for sure, though, the market is either up big or down big. How’s that for certitude.
Yesterday, I watched a big-name analyst talking general doom and gloom about the market. In the interview, the interviewer chided him, reminding him that lots of folks were listening, so if he had some facts for his assessment he should give them. The analyst said that insider buying and selling was a big reason for his negative outlook. He said that insiders were selling and little if no insider buying was happening.
I heard that and I wondered if it were true. Well research is my thing, so I checked it out. It turns out that big-name analyst either had his facts wrong or he was simply making it up when asked for some proof supporting his negative analysis.
It appears the opposite is actually true. According to Ben Silverman, Director of Insider.com, a company that tracks insider buying and selling for its clients, the last time insider buying provided such a strong quantitative signal for a market bottom was March 2009, the bottom for the most recent bull rally. As well, the numbers for insider buying verses selling from August 1 to August 10 go like this … 584 buys and 44 sells. That’s a little over a 13:1 ratio of buys to sell. Hmmm …
The point is we all need to be careful about taking on face value any comments from analysts, big name or not. Trading or investing successfully means you have to know and understand as much about the global economy and the market as you can. The machinery of these two intertwined entities runs on many variables, and the more of these you know and understand the better picture you have in front of you. Get your own information. You can trust, but make sure you verify.
The market these days is moving wildly. It is not a time for the squeamish (meaning me). So, I found the following question interesting, as it comes amidst a time of high volatility in the market, a market that is taking no prisoners and casualties are a daily occurrence.
I’ve never traded before. How much capital would I realistically need to start?
It is impossible to answer this question without understanding a bit about your financial situation, but, from what I know, I would say none. You should not even consider entering the market until all the fear is gone and stability has returned. Furthermore, you should not consider risking one dollar until you have studied the market for at least a year and then play-traded for another. This is serious business, and unless you have money to burn, perform your due diligence, which means, get seriously educated, learn the fundamentals, and then spend lots of time learning the craft of trading.
Trade in the day – Invest in your life …
