- When should an investor buy
and hold?
- The most obvious response to this question
is "when prices are low". If this is so obvious, then
why did so many investors and traders lose all their money during
the bear market of 2000 and 20001? If this is so easy, why didn't
you invest all your money at the low of 9/21/01? It's always
easy to look back and "see" how easy it should have
been. That's called hind sight and is usually 20-20 (vision).
Take a look at the market today and ask yourself the question
- should I put all my money in the stock market now? My guess
is that you don't know, but in a years time you might be saying,
"why didn't I invest that money in December 2001"?
-
- The Transition between a bear and bull market is usually a slow
one. The big question right now is where's the bottom. As some
of you learned from Princeton's TradeTutor, trends typically
follow specific patterns. One of these patterns is the confirrmation
after a strong downtrend. 9/21/2001 was the bottom in the NASDAQ
100 as of 12/24/01. Unless there is a major catastrophe, I expect
9/21/2001 to be the lowest low. Looking at this weekly chart
of the NASDAQ 100 you will see we are still in a downtrend. You
know this because of the lower highs
denoted by the yellow horizontal lines. The recent up trend was
expected because the mutual fund managers usually buy the stocks
that make their fund portfolios look good before year end. Notice
the break in the recent trend made by last week, (the last candlestick)
-
- Buying and holding stocks now might be a little too soon.
I am expecting a new higher low at about 1250. We call this a
confirmation of the low and a change in trend direction. This
will be the place to enter lower risk positions to hold for the
next bull market. Your stop would be set just below the low of
9/21/01. In the next newsletter I will show you a way to accumulate
stocks at the lowest prices.
-
- What stocks one should purchase depends upon what is
happening at the time and what you expect to be hot in the next
couple years. I like stocks like Cisco because they control the
internet routers. Even if they get into trouble the government
would have to bail them out. The airlines are necessary and so
the government is bailing them out. Maybe the airlines lost value,
but they didn't close up shop.
-
- When should you sell? That is a subject for another Trading Tips newsletter
or you could order Princeton's TradeTutor training courses and
learn more than just a tip and learn it right away. The training
in this newsletter is standard educational practice, but it is
a totally different world when you learn from Princeton's TradeTutor.
You can experience this learning method by ordering our FREE
4 Lesson-CD. Everything is explained to you in audio while you
watch the graphics on the screen. This is like someone standing
over your shoulder and explaining everything that happens as
they point to it on the screen. The only thing better is Princeton's
mentoring program where I would be able to answer your questions
as you progressed. But useful mentoring by a licensed and qualified
mentor is very expensive. This second edition of Princeton's
TradeTutor should be very self explanatory because I incorporated
most of the answers to the questions our trading room students
asked us.
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said it was? Well, that can't happen with the TradeTutor because
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