The secret to successful investing (not trading) is to buy stocks when others are selling at any price. Buy when fear is high! Traders on the other hand simply play trends. They buy strength and sell weakness and hope that the trend continues. I find it disappointing that successful financial book writers and financial market television commentators know that to sell their books, shows, stuffed bulls, etcetera, they must satisfy the psyche of the potential reader/viewer. Have you ever noticed the talking heads on the market oriented channels change their comments based on minute to minute variations of the various indexes to maintain your interest and panic? The downfall of this is that 90% of these commentators have no idea of what they are trying to explain to you.
Last week was difficult for all Americans; even with my cool and calm approach to money management, I could not help but stay tuned for political theatre at its zenith. My viewpoint is they accomplished nothing other than getting a bill signed to meet what we now know now was an artificial deadline. The next great thing is neither party liked what they got so now we are in gridlock until we hopefully find replacements in the election next year.
Once the bill was signed, the talking heads began focusing on the economy. Remember the basic rule of journalism is old news is no news, so to keep your attention they had to go to something new. The talking heads started using the terms “double dippers” and even used references to 2008 and the dreaded “R word” (recession) and brought on guests who specialize in dooms day investing when discussing the markets and the economy to drum up fear.
This is not 2008, nor is a recession on the horizon. Sure, we have economic and structural problems on the country but corporations’ balance sheets are as healthy as I have seen in a long time. Initial unemployment trends are gradually going down and ADP reported private job growth rising for the past 10 months. Household debt is coming down and our exports are going up. Where is inflation?
In conclusion, go out and buy snow shovels! Winter comes every year and it’s always great to get things on sale. And use that same logic when thinking about your portfolio. Mute the TV and look at real solid indicators.