Long Term Investment and Sub-Prime Mortgage Concerns

Assuming that you have decided to become a long term investor. You have done your homework and started to purchase some stocks.

The Dow Jone Industrial Average down by 281.42 (2.09%) last Friday. Are you concerned about how your stock portfolios are affected? Should you be even concerned at all?

The truth about long term investment is that you do not need to have sleepless nights. You do not need to be checking your stock prices everyday. You do not have to be concerned about price fluctuations on daily basis. You only need to be concerned about price movements over a larger time horizon.

Remember, all the stocks has been picked based on good fundamentals. Currently, the over market is still good. The long term trend for stocks remains positive. What does that mean to you? Your stock prices should be heading upwards in the long term. In the short term, there may be some days where the prices are down. Eventually, the price would go up.

The truth is that if you are worried about the daily changes in stock prices, you are not investing. You are probably speculating stocks.

Comments

Spanish Debt Issues

There is a lot of talk about Spanish sovereign debts recently. I came across a research paper which I think is very useful for me and wish to share it here. This is taken from www.fundsupermart.com, an online fund broker where you can purchase funds form various fund managers. This portal provides some research and comparisons and it is essentially a self service portal. From the chart provided, we can see that there is a problem for Spain to service their debts for the next 4-5 years if the debts are not re-structured. With this kind of risk, no sane investors would want to risk their money to buy Spanish bonds. They can only turn to European central bank for bail out. The blue arrow is a fictitious line I draw assuming re-structuring is going to happen. Essentially, they have to move the payment of capitals into next 5-20 years to be affordable. In addition to that, they can't make additional loans. This is just taking a very simplistic view of the situation. To have that hap...

Professional Investor's advice, market hype etc.

This is an article that I read on 26th September 2012. It has been over a year now and I suddenly remembered. I'd posted this last year with some other predictions from CNBC etc. During then, I was very fascinated listening to these experts. They are so confident and so logical. I always admire their ability to "read" the market and manage hundreds of millions of dollars of other people's money. So of them managed billions of dollars. Then I thought what if they ever go wrong? Won't they lose a lot of money? So, I think it would have been interesting to remember what they said and then we verify later. On 26th September, the S&P 500 index closed at 1433.32. One year went on and it went up another 19% from there. Below is S&P 500 over last one and a half year. As we can see, the market has still been a bull. Over the one year period, the S&P 500 index did correct itself. However, it was a

More about Market Timing

There has been talks about end year rally during the earlier parts of this year. Particularly in February to March period when the market was suffering from 'temporary' set back. During that time, even though the European Debt crisis were looming, the Asian economy was still booming. However, as the time passes, the European Debt crisis becomes more apparent. Countries were finding it more and more difficult to cover up. More facts emerge and picture became clearer. The earlier investor pull back and market began the down trend again. In such time, we will invariably turn to tools that we think will help us to foresee such events. This is where macro economic theory comes in. However, for traders who are not well read on such topics, they want to use some thing faster and easier. Then, Technical Analysis comes into play. Using technology, TA can be very fast and handy. Here is a classic example of using TA: http://www.etfguide.com/research/705/8/The-Chart-That-Trumps-Anal...

Good Investing Lessons

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