Well here we are again with all the Press, TV and radio all saying it’s the end of the world as far as the stock markets are concerned. I would urge all investors spread betters included to look on the stock market as a long term investment. By all means take a quick profit if it’s there. but if you are nursing losses, the likelihood is , if you do not crystallise your loss by selling and leave your spread bets or shares in there, over the next 5 years or so they should prove to be a good investment.
I understand for most it is sensible to have stop losses in place. in April 2009 all my bets on the DAX were stopped at under 3500, within 2 years that index was back above 7000. The April 2009 experience cost me many thousands of pounds.. Since then I had all but clawed those losses back until last week. When the losses start coming in again. Am I perturbed,depressed or full of FEAR, no. History shows quality indices (Nikkei aside) do recover. I now follow Warren Buffett’s example of buying quality blue chips and if no short term profit is there, just leave them until a good and respectable gain is showing. Yes you need to have a positive manner when each day you look at your SB account and see those red figures but look on it as one day nearer to the big push upwards. Bear markets are generally shorter (but harsher) than bull markets which tend to run for much longer periods. The DOW and FTSE tend to have about 10 days a year when they are massive gains that come like a bolt from the blue and I don’t think even the best strategist can capture them other than leaving your money in there.
I recently finished reading the Naked Trader 2 by Robbie Burns and I would strongly recommend this book. Robbie conveys a no nonsense (but at times humorous) guide to investing in equities (via the stock market and by spread betting and also the many advantages of the latter way of investing)) and checking out backgrounds to companies, debt level, Annual Reports etc -very good. Other suggestions the Richest Man in Babylon and also Rich Dad Poor Dad, both great books for developing a positive mind set.
Keep positive!
Chris
Chris has been trading spread bets since early 2009. He is a traditional share and mutual fund buyer since 1973, starting with M&G American and General Accumulation Units. He focuses more on technicals than fundamentals, believing we are the last in the media chain to hear things “it’s yesterday’s news”. He uses an investing strategy when purchasing spread bets and is guided very much by long term trends. He focuses particularly on DAX, DOW and FTSE (has given up on Nikkei) and looks for blues chips like BG (British Gas), BP and Tesco.
Just a little update on when my script above was posted the DOW closed at 10800, it’s now lurking around the 11300 mark, just shy of 5% above. Do note I do not say “never use stop losses” but be aware, certainly on the main indices, that you shouldn’t get spooked by sudden falls and stop losses that shake you out just before the indices rise again. Stop losses based on good technical data (supports and resistances, moving averages etc will certainly be better than gut instinct and probably are quite useful for frequent traders). But I want us all to be amongst the 10% or so spreadbetters that make a profit. Thus I recommend the investor strategy of looking at holding primarily indices rather than solely using spread betting for short term profits. If they are there, certainly take them if they are good short term profits but be prepared to hang on in there, if necessary.
From a long term prospective, I would consider the DOW and footsie excellent value around 10200 and 4750 (so watch out if some further selling serves up these levels). Both Obama and Cameron have great interest in keeping the economy well stoked up, given the 2012 US elections and Cameron/Cleggs marginal hold on power. Ther is even talk that the UK may go in for another round of Quantitative Easing and we know what happened to all that extra printed money last time ( a raging bull market since 2009!).
Keep positive!
Just a little update on when my script above was posted the DOW closed at 10800, it’s now lurking around the 11500 mark, just shy of 6.5% above.Didn’t I do well!
hold on, there’s a lot of bad news out there- the Euro, the PIIGS economies, unemployment figures in the West, the banks loooking dodgy but hey turn the clock back 2 years and mmm de ja vu…ish. My instinct is there is a need for an excuse to mark prices down but the aforementioned are rehashed newspeak and are not strong enough to do that. The solution offered by the ECB- oh we’re are all going to get together and issue good value bonds to enable the Eurozone to stay together- and suddenly we are all happy and buying stocks again. Well me, I don’t buy that either.
I see the next few months being in a FTSE 5500 and 4800 corridor and the DOW 11900 to 10900 band. But there may be another great annoucement that shakes this up-wait and see.
As always don’t buy stocks or shares or other investments solely on what you read here, do your own research and if in doubt employ an independant investment advisor.
Keep positive