Don't Always Look on the Bright Side
Hello Crazies.
You may know by now that I have a tendency to look on the bright side. This is inbed optimism and I contend that most share shifters have it – otherwise they would not risk their money by trading stock.
You may also have noticed that through most of the present downturn, I’ve been saying it won’t last. And of course, it won’t. Every bear market is balanced by a bull market – and it’s just a matter of timing and cycles.
Or at least Crazyland has run on that pattern up till now. And as the world gets richer (generally speaking) then I’ve no reason to believe that, as the years roll by, the grand old game will continue to be profitable – if not every year – then possibly for most of ‘em.
And yet being too optimistic can have dire results, if we’re not careful. If we think shares will rise every time, rather than fall, we will be wrong – and could lose money.
Whatever our overview of the share situation, we should never forget that on many days, share values will decay. If we can grasp that very obvious fact, then we will sell stocks as easily as we buy them.
At the moment, the optimistic urge can make us bury our heads in the sand when times are poor. I believe this to be a mistake. Because if shares begin to fall, then they should be sold to avoid further damage. Yes, they may perk up after we sell them, but in my experience a falling share continues on that dodgy path, even if it does rise two steps before it falls back three.
Those shares which keep on rising, especially in bear markets, are well worth supporting – at least until they start falling. And falling shares should not automatically be expected to rise afterwards. Sometimes they just don’t. Rocking on.
Posted by Malcolm Stacey on Aug 27, 07:47 AM in Thought For The Day- Post to: del.icio.us
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