How to be a winner in stock market
No one, including Ms.Yellen, is encouraging you to save money. Why? Because for every one percent increase in the national savings rate it stops the spending of $85 billion (yes, that’s a B). That would slow the economic recovery and our Washington politicians don’t want that. Debt has become the “in” thing. People brag about how much they owe.
Saving money, paying your bills and smart investing have not gone out of style.
The key to the stock market is timing
Everything looks smooth. The waters are calm and the breeze is at our back. When that perfect storm was forming in the Atlantic Ocean there did not seem to be any danger, but the meteorologists watching their satellites and computers could see that all was not well and a terrible storm was forming. They realized when it hit that ships would be at high risk.
There are meteorologists of the stock market. They are a combination of technical and fundamental analysts and it is their job to predict the stock market weather. Like weathermen the job of prediction is not easy nor is it an exact science, Many get it wrong, Today the news of the stock market and the economy is dominated by the fundamentalists who see excellent weather and tranquil seas. Many technicians see it otherwise. They are predicting that there are formations that could produce a perfect storm that will wipe out many portfolios.
Historically the timing of fundamentalist (those who follow the reports of company profits and government statistics) usually lags while the prediction of technical analysts (those who follow chart patterns and historical data) has been much more accurate.
You are not alone
If you have been watching the stock market at all you are probably very confused. You are not alone. One day is a hundred points up for the DOW and the next a hundred down. What is going on? There are many stocks that are going up and unless you are in the right ones you will be left behind.
Making money in the market is all about being in the right place at the right time.Picking an individual stock that will double in a year is very difficult so I don’t recommend you try. You limit your selection to these. There are 3 that are very outstanding now – the Small Cap Value, Mid Cap Value and Real Estate peer groups. They are all in double digit profit territory while most mutual funds as a group seem to be going sideways. These can be most easily found by searching on the Internet or calling a discount broker to see if he will get you a list. Most of them do not want to do the work for you especially since there is no commission involved. If you care about your money you will do you own searching.
Most investors have no plan as to how much money they would like to accumulate nor how to intelligently go about it. They don’t know where they are going and they don’t want o be late.
When you have decided how much you need to save the next important step is not what to buy, but how to exit in the event what you do buy happens to go down instead of up.