Was the American stock market plunge reason to be nervous or just a buying opportunity? I’m asking because I’m green when it comes to investing and I want to hear other, more experienced opinions. I’m a newbie when it comes to stock market investing but I do understand that lots of people have recently lost lots of money. But is the drop a reason to be scared for someone new coming in like me?
America is not an unstable 3rd world country or anything. So things should stabilize in a while and then head back up. Isn’t this a great time to buy stocks cheap?
For someone green like you, no. You should not be buying stocks. Seasoned investors should only jump in, then jump out quickly with profits of 2% or better on the swing. Whether you play the long or the short side, when you get 2% profit, jump out and wait for another attack. Think guerilla attacks against the better trained and equipped institutional snipers.
For a riskier strategy buy gold and hold it long term.
Gold is still operating under a powerful resurrection cross.
The Fibonacci retracement shows that we are near the 50% retracement level which may be a good entry. It is also very near the 200 day MA line which also may be a good entry.
Watch the 200 day MA line. If broke, look for an entry at 80.17 which is previous support as well as the 61.8% retracement.
If there is a long white candle bounce off the 200 day MA line with a volume of 30 million shares or greater, go long.
I am currently long in GLD myself with about $300 at a cost basis of about $92.50. I plan on accumulating more at current price levels.
Fundamentally, there is little doubt that gold will rally at some future point in time. As you hear Obama talk about government spending more and more money to help the economy, think dollar dilution.
Rumor has it that some big institutional firms like JP Morgan are shorting gold in order to prop up the U.S. dollar. So this longer term strategy is not without risk.
Guerilla attack the institutions by taking profit on your longs when they cover some of their short positions in gold. Go for a swing move of 5% then take profits, wait for another pullback, then do it again.
Don’t get too greedy with anything in this market: bulls make money, bears make money, but pigs get slaughtered.
Related Articles:
- Can anyone recommend a good book on stock market technical analysis? I’m looking for something written in plain english that a person with an average IQ can read and use. A...
- How would you play a straddle on the Nasdaq Market without buying the put and the call on one stock symbol? Scottrade will only let me do one put or one call per stock symbol. The problem is that I want...
- Discover The Hidden Secret To Buying In At A Low Risk Entry Point In the Next 5 Minutes WITHOUT Guessing Once you learn this system, you will NEVER stress about your buying at the wrong time again! Above all this...
- Institutions Buying Foreign Stocks – How Much Money Could You Make Doing This Yourself! If you’ve ever wanted an easy way to make money in the stock market, a powerful money-sucking profit stream, then...
- Insider Stock Market Timing With the S&P 500 Video Adam, a former Wall Street insider and million dollar stock market timing trader breaks the silence and tells you exactly...
The world is not stable and the US market is closely tie to the world. Cash is shifting to the bond market and less volatile commodities.
Try a high growth foreign market and leave the US market to the pros for right now.
Plunges in the market have historically been a good time to invest. Now, it also depends on where you invest as well.
There certainly is reason to believe that stocks might get cheaper still. America is not so stable as you might have imagined. It is fueled by debt. Now that debt has become shall we say unstable, the fuel supply might be facing an interruption. This might just be the beginning. On the plus side most corporations are fairly healthy and stock valuations are not out of line with reality. But none of that will really matter all that much if people stop spending, which there are indications that they are.
Here’s my take: there are investors that are bulls and investors that are bears. The volume of trading lately has been extremely high compared to past volume levels. The news has been all over the map and investors interpret each bit of news the way they want. This leads to high market volatility.
If you are not able to follow the market closely, now is probably not the time to have your money in the market. Simply move your money into fixed rate accounts and wait this out. If you can survive the immense swings day-to-day, you can make lots of money with the volatility. It takes lots of homework on the stocks you own. If you have done the homework, you will know what to do with your holdings.