Put Your Stocks In a Drawer and Forget About Them

The market has been like Chinese Water Torture the last few weeks. Most days are down and the pervasive mood among investors and the media is very negative.

This is the time to put your stocks away in a drawer and forget about them. If you have done your homework on your holdings, then you should be confident about the company and its prospects. Don't get sucked into the negative mood and make rash selling decisions.

Certain segments have tainted the overall market and that could continue for another couple weeks. However, if the overall prospects for the companies in your portfolio have not changed, there is no reason to act right now (unless you are buying).

I have used this downturn to add to my favorite positions and I will be 100% invested by the end of the week. Then I plan to sit back and relax and simply ignore all the noise in the market. I have not deployed leverage in my portfolio, so I honestly do not care how the market chooses to value my holdings in the near term.

I am confident that in 12 to 18 months, most, if not all, of my holdings will be significantly higher than today. So why should I care what their values are today.

Now is the time to grab another summer cocktail and read the tales of woe of overly leveraged investors scrambling to cover margin calls -- that or simply read a good book.

Comments

[Solution:]

Good advice. Market come back before close. And Russell up 2.3% today !! Is this so called capitulation ?

2007 Aug 16 04:11 PM

[Al Capital:]

Commenting on Dong's question regarding capitulation, the market average behaves differently than individual stocks. On the downside, individual stocks may or may not have reached "capitulation". Unlike the notion of "momentum" for individual stocks where the idea is that stocks that go tend to go up (thus a sentiment measure), the financials create a momentum more like that in real physical spring loaded systems. Thus you can expect to see wave-like market-average changes like a damped oscillator caused by adjustment in the financial sector.

2007 Aug 16 04:25 PM

[Blue collar...:]

Roger that! boy, am I ever with you.

2007 Aug 17 10:24 AM

[markj:]

Hear hear, leave the panicing in and out to the "pros"

2007 Aug 17 05:09 PM