derryl

Closing Update for Tuesday, August 18: Some Recouping

My guess is that we'll see a few days of sideways action now that the "disbelief and profit taking" correction has proved that this market can drop without collapsing. Then the uptrend will continue for maybe a month or two before another weak correction. We could go on like this for a long time.

I think this market is either discounting the real economy or has decoupled from it. As John Lounsbury says, "we're all traders now", seeking trading profits rather than long term dividends from the stocks we buy and sell. So the market can rise even though the economy is flat and corporate earnings show no signs of improvement, dramatic or otherwise. It's all about money coming in vs. profit taking. And it's probably being backstopped by high frequency trading with the blessing of the administration in the interest of reflating at least one asset class.

As retail traders we are too small to move the market or to even be noticed, but we are not too small to lose all our money. So don't be greedy. Don't worry about missing some points of downside or upside. If you can settle for modest profits you can make decent money in this kind of market.

Awhile back there was a SA article interviewing a couple of old sisters who had made millions in equities over decades. When asked their secret they said without hesitation, "12%". They always sold when they could make 12%. That sounds wise.