Doc's Diamonds

Rocky road ahead as we start our journey

Rating: 0 not yet rated(0 votes)    Vote:

You are logged in as | Logout

Well, we are all on the verge of starting this competition and I know the first thing we think about is "What stocks do I want to buy??". That is certainly how I normally look at any investment portfolio I have. I am generally not a "short sell" artist and rarely use that strategy. However, since I see some rough waters ahead, I might start with a large cash position to see which way the winds are blowing first.

I think the odds are that we are in the early stages of a market correction. This may last a few weeks or possibly much longer. However, I believe, if we do have a further correction, that will present a bunch of great buying opportunities. Everyone must remember that the biggest difference between this market drop from a high (although it sure has been pretty fast) and the drop, say, in 2000 is that this time the fed. fund rate is fairly low and the stocks are much more reasonably valued. When valued by price/earnings, PEG ratios, or other "value" indicators, we are close to historical averages and certainly not high.

Therefore, without an unexpected geopolitical event or natural disaster, a smart investor would take some gains off the table for the short-term, but plan a strategy of reinvestment going forward once we get the winds at our back a bit and weaker hands are sold out of the market. That could even come this week, at least for partial positions to be started. That is my initial plan. Now, for those who really want to "win" this competition as opposed to investing wisely, large positions in a stock which might have a blow-out positive earning report would be a good strategy. Of course, if you are wrong, good luck catching up!!