Monday, August 20, 2012

What exactly is the Stock Market? It's the sorted technique where any person and also all people could possibly acquire as well as promote the stocks or even shares


Keith_Springer_Stock_Market_Analysis by Keith Springer


First of all this is a loaded question. There is no one on this earth that could tell you when the stock market will stop plunging and begin to go back up. If such a person existed, they would be on their own island and there money would dwarf that of Bill Gates himself.

I think the real question people need to asking themselves is how long do I have to invest my money? If you are not going to retire for 30 more years you have plenty of time to ride out some volatility and this may be an excellent time for you to buy. If however, you plan on retiring in the next couple of years, perhaps the stock market is not were you want to be. Remember, having time on your side buys you a little more risk, but a lack of time does not.

Another question people need to asking themselves is how much further can the markets go down. I was a stockbroker during the crash of 2001 and people euphorically sold thinking that the stock market would never stop going down. My reply to people like that was, "for the stock market to go to zero, every company that is publicly held would have to be worthless." This is NEVER going to happen. It didn't happen then, it won't happen now. I'm pretty sure companies like Wal-Mart and Exxon-Mobile aren't going anywhere.

Granted we have a lot more going on now than we did in 2001 with the collapse of the housing market and the credit disaster, but with every major downturn a major upturn follows and visa-versa. It happens in every type of market, people get that attitude of it's never going to fall and it falls. Then they finally give up and say it's never going to go back up and it goes back up. Now I'm not saying that I think the stock market is going to go up anytime soon because I just don't know. What I do know is that it will eventually go back up.

The smartest thing to do if you are waiting to get back into the market is wait. Remember that even a rally here and there does not mean the bottom has been hit. This is called a "dead cat bounce." In other words, if you drop a dead cat off a building it will bounce somewhat when it hits the earth, but then will fall back down. Harsh analogy I know, but it's one used in the financial world all the time. Once the market is going strong again and you feel better about it, then invest. Who cares if you missed the bottom? As long as you don't wait until the next time the market has flown up and everyone is thinking it will never go down again, you should be all right. Don't let yourself get sucked into what the masses are doing. I don't know why, but history has proven again and again that the masses are usually wrong.


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