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Volatile Stock Markets Are Good

June 24th, 2006 at 07:57 pm

I received an email article submission in response to the Investing In A Volatile Market article that was placed on our Investing page a couple of weeks ago. The title of the article is A Volatile Stock Market Is Your Dearest Friend which makes a number of points includiing:

Call it foresight, or hindsight if you want to be argumentative, but a long-term view of the Investment Process eliminates the guesswork and points pretty clearly toward a trading mentality that keys on the natural volatility of hundreds of Investment Grade Equities. During corrections, consider these simple truths:

although there are more sellers than buyers, the buyers intend to make money on their purchases
so long as everything is down, don't worry so much about the price of individual holdings
fast and steep corrections are better than the slow attrition variety
always accept even half your normal profit target while buying opportunities are plentiful
don't be in a rush to fill your portfolio, but if cash dries up before it's over, you are doing it "correctly".

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