Just to make a few comments about investing in general.
First, it is possible to time the market, but it is not for the average person to run around trying to do it. Anyone who reads my blog saw the post of 5/10 warning of a bearish pattern in stocks. Obviously, this “timed” the market pretty well. However, I have been studying the markets for 20 years. I was not always as adept at moving in and out, as I am now.
People always say things cannot be done when it is really they who are incapable of doing them. There are people out there with track records of doing this well. The big money funds are always pounding the table about not timing the market. I also addressed this on my blog with a table exposing the fallacy is this nonsense.
This does not mean getting into an emotional frenzy about doomsday and selling everything and hiding in a hole. It also does not mean throwing caution to the wind on a hot stock tip and barging in with both barrels loaded. That is not timing, that is being emotional. Rarely will that type of action be rewarded.
Timing requires a complete separation of emotion from investing. It also requires alot of research and experience. Above all, it requires discipline. This is no easy task. I have made thousands of trades and still at some times get a little ticked at a loss. It is just human nature.
The post about defining your investment strategy was excellent. Also, identify your tolerance for risk. Then determine how do diversify your risk across your total portfolio.
Clearing any debt is always the best first choice. Once that is done then some of these other suggestions make sense. There is a time and place for cash/cd’s/t-bills. The biggest mistake I see people make is getting into a frenzy over having to have their money in the latest greatest fad.
They chase the momentum money, right at a time when the momentum is fading. Real Estate is a perfect example of this. Gold at $725 was another. I warned against buying it there on my blog, and here it is at $643.50 as I write this.
For those of you who like stocks, there is a strong cyclical tendency for a rally in the fall to occur. I will be watching other things in my model to tell me if the green light is on when fall gets here.
Good luck to people in their 20’s. I wish I had the smarts to ask the questions you are asking. I was too busy being a blockhead!
