Sam, my long deceased market guru lab, is enjoying the comedy here on earth and how completely insane we moral react to news. Long-term views are out and News and Fear governs Wall Street, always with overreaction both ways. For instance, Trade Wars on, trade wars off, Kim going to meet with us, Kim not going to meet, etc. What happened to the profits and economy looks splendid and futures should be bright? Gone, thanks to the gamblers trying to outsmart each other to gain footing short-term. It has become a game interrupting the plans of to we long-term investors. So, what do we do? Option one is play the game and gamble along; option two just close you eyes and let the gamblers trip over each other and focus on long-term.
I like both options. I, with my dog's guidance, know where I need to be long-term and how to add to my diversified account. actually, I very seldom look at anything new and just add to existing investments. I do occasionally readjust positions due to industry moves within the economy cycles. But, this is simply moving money from one place to another. Thus, my long-term has been proved and verified valid during the last 20-25 years.
Gamble? I guess you call it that any time you buy/sell anything. When? How much? I monitor the DJIA and NASDAQ and watch the relative changes (Williams % R indicator on charts), as well as look for the crosses of short-term moving and long-term moving averages. These give me some insight on expected up/down and when to buy/sell. In today's market, I love the overreactions the gamblers present. I do NOT put myself in the gambler-definition which I define as horse track betting mentality and large HOPEFUL wishes employed rather than sane probablilities -- always looking for the big score. Seldom do you hear about the big loss from these players. My strategy is to buy when the %William R CURVE just begins to head back up (never on way down), above the 80% heading to 0% (UP curve) AND the short-term moving average heading to cross over the long-term average in an upward direction. That;'s when to buy. The opposite is when %WilliamR goes below 20% and returns back down (the curve that is) beyond towards 100% AND the short-term average crosses the long-term average in a downward direction. This is the general concept and buy/sell scheme that has worked for me for decades.
As I just said, the overreactions due to the gamblers driving things up (can't miss out) or down (gonna lose everything) presents changes to the %Williams R quite often. Use that to an advantage. I seldom sell more than once or twice a year and only to rebalance portfolios. So, pocket change from dividends, called in preferreds/bonds, or sells to lighten up an an industry (Cramer has a decent book re the economic life cycle and industries that benefit or should be avoided and when -- also Fidelity has an excellent article just on this).
But bottom line, stick to those investments you chose wisely that have performed for decades. Trade Wars - short term actions. You may end up paying more for something due to them, but return is the profitability of America's companies allowing for income increases, dividend increase, etc. Either they will balance out, or I would venture to say work out more benefit than not long-term. And, does Kim bother me? No, SSDD as Stephen King would say. We have the advantage and can reach out to help troubled countries like his for the world's benefit. His games will continue! They have little influence except to cause overreaction by the people you live on improbable FEARs. Take advantage of the market drops and buy. Maybe in 2-3 years something will be accomplished in the world of Kim and equitable trade. Don't expect it NOW! Continue plopping what you can into investments that get you more than -1% after taxes! I'm content with just 7-8%/yr (more than 2-3% above inflation).
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