Sell On The News As A New Era Dawns?
Have we just witnessed a Democratic “tsunami”? It might be too early to say for sure, but one thing seems obvious, the majority of the voting electorate has spoken and told the politicians that they want “checks and balances” in government, they want accountability, and perhaps they want “gridlock”.
How will this impact the investment markets? Rumor has it that the markets are bracing for a more combative environment in the nation’s capital. Rumors are flying about the possibilities of changes in tax rates and the jury is still out about what the Fed will do next with interest rates. The market with the biggest question seems to involve the stock market. What is the key to making money in the stock market during times like these?
Once again we have turned to our mentors for some consensus on this question. One of them, the legendary commodity guru George Kleinman had the following words of wisdom this morning that speaks to the title of today’s Money Rumor Mill:
“What’s the key to making money in the stock market over time? The answer is simple--don’t lose money during the down periods. I can see you rolling your eyes on that advice, but before you give me a “thanks a lot for that,” I can tell you this advice is actually profound.
One of the keys to success and wealth building is to turn some of your paper profits into real cash when available and not to lose money when profits become elusive. Now, I’m not talking about every trade or every investment--of course, we'll all lose money at times.
To clarify what I’m talking about, don’t ever lose big money. And when you’re fortunate enough to have paper profits significant enough to make a noteworthy improvement in your net worth, don’t leave it on paper--turn it into real cash.
At a wedding not too long ago, a relative of mine told me she was in on a dot-com IPO from the beginning with an initial investment of $100,000, and at the top she was worth $8 million (on paper). The company is now extinct. What was her net result? A loss of $100,000--she didn’t even cash in $1 of profit (and yes, she’s still working for a living).
What was she thinking? I don’t get it, but after a few decades of doing this I’ve heard the same story in varying degrees time and time again. There must be some psychological explanation beyond what I’m able to comprehend.
The key to wealth is to limit your loss during losing periods and accept some gains during the good times. “
How does that grab you? We are actually sobered by this timely reminder. And we have been practicing what he speaks about. We’ve been taking profits in such stocks as Diageo plc (symbol DEO), Microsoft (symbol MSFT), General Motors (symbol GM) and some of our mentor’s favorite metals stocks like Silver Standard Resources (symbol SSRI) and Northern Peru Copper (symbol NPUCF). We are NOT suggesting you sell any of these stocks. What we are passing on to you is that the experienced investors know how to not only let their profits ride but to capture some profits or partial profits when they have them available.
One of our early mentors used to remind us, “You can’t loose money taking a profit”. It reminded us if we have a nice profit in an investment position and we don’t know whether it is going higher or lower from here, we could take some profits and then be ready to buy on any pullbacks or corrections. Actually our mentors overall are quite bullish about stocks over the next couple of years but they constantly remind us that certain stocks have had quite a ride already and might be due for a correction and a sell-off. With the elections over (except for the final determination of which party will control the Senate), the near-term uncertainty will be focused on what the coming gridlock in Washington might mean for investor confidence and government spending policies.
As we say this the markets are digesting the election results and all the other news. The uncertainties about the energy markets, the geopolitical hot-spots, and the potential for other surprises might just make this market susceptible to what some mentors call a “consolidation”. Of course nobody knows for sure. One thing this tells us is that it will continue to be a stock-pickers and investment-pickers market. We will all need to follow the guidance of the great investors and carefully choose which voices we will be listening to.
As we write the big pharmaceutical stocks are taking it on the chin. Johnson & Johnson (symbol JNJ), Pfizer (symbol PFE) and Merck (symbol MRK) are down between 1% and 4% on the day. We will follow the grapevine on more sectors that might correct (like defense stocks) but we will look to our mentors to guide us as to how to take advantage of the situation.
The time to get interested in solid investments is when they are attractively priced. The time to sell is when they are priced for perfection. Now might be a good time to look at our portfolios and see if we have some good opportunities to take some money off the table and prepare for the next buying opportunity. Get good counsel on this and if you are willing to risk making a mistake, then err on the side of caution and prudence. It’s hard to loose money by taking some profits.
How will this impact the investment markets? Rumor has it that the markets are bracing for a more combative environment in the nation’s capital. Rumors are flying about the possibilities of changes in tax rates and the jury is still out about what the Fed will do next with interest rates. The market with the biggest question seems to involve the stock market. What is the key to making money in the stock market during times like these?
Once again we have turned to our mentors for some consensus on this question. One of them, the legendary commodity guru George Kleinman had the following words of wisdom this morning that speaks to the title of today’s Money Rumor Mill:
“What’s the key to making money in the stock market over time? The answer is simple--don’t lose money during the down periods. I can see you rolling your eyes on that advice, but before you give me a “thanks a lot for that,” I can tell you this advice is actually profound.
One of the keys to success and wealth building is to turn some of your paper profits into real cash when available and not to lose money when profits become elusive. Now, I’m not talking about every trade or every investment--of course, we'll all lose money at times.
To clarify what I’m talking about, don’t ever lose big money. And when you’re fortunate enough to have paper profits significant enough to make a noteworthy improvement in your net worth, don’t leave it on paper--turn it into real cash.
At a wedding not too long ago, a relative of mine told me she was in on a dot-com IPO from the beginning with an initial investment of $100,000, and at the top she was worth $8 million (on paper). The company is now extinct. What was her net result? A loss of $100,000--she didn’t even cash in $1 of profit (and yes, she’s still working for a living).
What was she thinking? I don’t get it, but after a few decades of doing this I’ve heard the same story in varying degrees time and time again. There must be some psychological explanation beyond what I’m able to comprehend.
The key to wealth is to limit your loss during losing periods and accept some gains during the good times. “
How does that grab you? We are actually sobered by this timely reminder. And we have been practicing what he speaks about. We’ve been taking profits in such stocks as Diageo plc (symbol DEO), Microsoft (symbol MSFT), General Motors (symbol GM) and some of our mentor’s favorite metals stocks like Silver Standard Resources (symbol SSRI) and Northern Peru Copper (symbol NPUCF). We are NOT suggesting you sell any of these stocks. What we are passing on to you is that the experienced investors know how to not only let their profits ride but to capture some profits or partial profits when they have them available.
One of our early mentors used to remind us, “You can’t loose money taking a profit”. It reminded us if we have a nice profit in an investment position and we don’t know whether it is going higher or lower from here, we could take some profits and then be ready to buy on any pullbacks or corrections. Actually our mentors overall are quite bullish about stocks over the next couple of years but they constantly remind us that certain stocks have had quite a ride already and might be due for a correction and a sell-off. With the elections over (except for the final determination of which party will control the Senate), the near-term uncertainty will be focused on what the coming gridlock in Washington might mean for investor confidence and government spending policies.
As we say this the markets are digesting the election results and all the other news. The uncertainties about the energy markets, the geopolitical hot-spots, and the potential for other surprises might just make this market susceptible to what some mentors call a “consolidation”. Of course nobody knows for sure. One thing this tells us is that it will continue to be a stock-pickers and investment-pickers market. We will all need to follow the guidance of the great investors and carefully choose which voices we will be listening to.
As we write the big pharmaceutical stocks are taking it on the chin. Johnson & Johnson (symbol JNJ), Pfizer (symbol PFE) and Merck (symbol MRK) are down between 1% and 4% on the day. We will follow the grapevine on more sectors that might correct (like defense stocks) but we will look to our mentors to guide us as to how to take advantage of the situation.
The time to get interested in solid investments is when they are attractively priced. The time to sell is when they are priced for perfection. Now might be a good time to look at our portfolios and see if we have some good opportunities to take some money off the table and prepare for the next buying opportunity. Get good counsel on this and if you are willing to risk making a mistake, then err on the side of caution and prudence. It’s hard to loose money by taking some profits.
posted by Marc Mentor at 9:26 AM
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