>Air Pockets, Bottom Building or Big Bounce

>Tuesday’s financial market action caused additional fear and confusion for the retail investor. It appears every time the individual investor wants to get in the market we hit another air pocket and the bottom drops out. A lot of this was end of the quarter rebalancing and over reaction on new from various sources that in hindsight had no real relevance to the current trend.
This is quite an unusual market and is proving to be one that will rewrite the history books. The reality is we are going through an evolution. With the advent of technology the bubble factor is something we will have to live with. Electronic trading has increased the volatility in the market; 300 to 400 point moves in one day will become the norm and not the exception. This puts traders and “do it yourselfers” at a disadvantage never before seen. Even the lofty hedge funds are struggling. What is the solution and how are we going to get the retail investor to realize that this is not all bad?
The solution is sound advice, proven theories and disciplined portfolio management. The basic principle of all investing is buy low and sell high which appears to have been forgotten not only by the retail investor but money managers also. Few people make money at the top of a market. There is no magic theory for success when investing, only sound principles and disciplines which is true for all areas of our life.
We are facing many headwinds as we enter into the second part of 2010 but I am a great believer in free markets. As I stated earlier, we are experiencing a history changing event but it is a good thing. I believe we will return to a normal market environment by fall, which makes now the time to reassess portfolios. Remember buy low and sell high!
Have a safe and happy 4th of July,
Bill

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