Sometimes the stock market goes on a roller coaster ride when there is no clear vision of what the future holds in store. In every stock market cycle there is are low and high points when the indices trade at their yearly extreme lows or overvalued highs for no real reason apart from sensationalistic panic news or greedy manic buying that has no truthful, sound investment foundation. These are opportune points of entering a trade for stocks you have on your buy wish list or short an overvalued stock on your short list but be very cautious when shorting a stock.
“How many legs does a dog have if you call the tail a leg? Four; calling a tail a leg doesn’t make it a leg.” – Abraham Lincoln.
Any person who is looking for common sense will not find much in the gyrations of the stock market when there is high volatility. In today’s media world, unfounded fears and negatively slanted opinions, feeds the public. The naive TV commentators and over-reactive newspaper editors supply the erroneous nutriments.
“Believe nothing just because a so-called wise person said it. Believe nothing just because a belief is generally held. Believe nothing just because it is said in ancient books. Believe nothing just because it is said to be of divine origin. Believe nothing just because someone else believes it. Believe only what you yourself test and judge to be true.”
– Buddha.
When one set of government statistics are released, the doom and gloom merchants jump on the bandwagon to spout their well-chosen words and hey presto … The markets go down.
A typical comment will be “The next six months company results will be poor because the latest figures indicate the economy is getting weaker.” How can they possibly know what the company results will be in six months time?
“All truths are easy to understand once they are discovered; the point is to discover them.” – Galileo.
A few days later, another bunch of controlling experts will come on TV and declare; “The economy is too strong and interest rates will have to rise steeply … so the next six months company results will be weak … Everyone should sell their shares and get out of the markets ASAP.”
How can they conceivably discern what events establish themselves in six months time?
What happened to honest reporting … that just disclosed the facts?
The only people who stand to strike short term gain, in the stock markets uncalled for downturn, are the ones with billions of dollars in hedge fund short positions … It is they who raise their cups of plenty and sing… Three cheers for, negatively slanted financial news … reported by mislead comment-taters. However, long-term, very few people earn money by shorting stocks.
“Where large sums of money are concerned, it is advisable to trust nobody.” – Agatha Christie.
People with common sense will always make intelligent interpretations and in the long run come out on top … The smart investor buys cheaply, the companies that negatively slanted reports may try and distort. They know a company with strong, honest balance sheets, mindful management, sound products and serving the public with what they desire, will make them money. When stocks become overvalued it is time to sell and wait for the next downturn before buying.
“Love all, trust a few.” – William Shakespeare
The astute investors will buy when others are selling out of fear and sell when the taxi driver and the barber are giving tips on stock and a buying mania is going full pace … In the long run that is how millionaires are made. Let the Wall Street fiddlers play the tunes for a while and maybe the media fools will dance in rhythmic ignorance… However, in the end, the wise investor will reap the rewards.
They understand the simple rule … Sell when prices are high and buy when they come down.
“If a little money does not go out, great money will not come in.”
– Confucius
Leisurely drip investing brings rich return. Buying a few shares, each time a well-researched companies price falters, will bring super returns to the wise investor … Cream will always rise to the surface.