Stock Trading and Other Things

Can someone please explain stock market investing to me?

I've always been told that the stock market is a good long term investment if you have a diversified portfolio.

OK, so why are ALL stocks tanking right now? If investors are in it for the long run, why sell everything and not just finanicial institution stocks?

For example, let's say I have stock in Apple, Merck, ADM, & Krogers, should I bail on them now like everyone elsel seems to be doing?

Why aren't more people weathering the storm with their stocks?

Yes, I don't know much about investing!

Public Comments

1. There are two classes of stock funds, Bull Investments that go up when the market is good, and down when the market is bad.

The other type of stock is known as Bear Investments, they do just the opposite of Bull Stocks. They go up when the market goes down, and they go down when the market goes up.

Year To Date, Bear Market Investments are showing stellar results in the 65% to 110% increase in value.
For some reason most investors missed the turnaround point and kept their Bull Investments.

2. Dear Karl,

You've got it partially right but unfortunately seem to be the victim of your own mis-perceptions. I would re-phrase your opening comment to say "The stock market is a good place to invest over the long term if you have a properly diversified portfolio and are able to recognize and react to normal market cycles."

All stocks aren't tanking right now, just most stocks. I own a couple that I bought within the last 45 days that are up over 30%, one of them over 35%. There is always money to be made if you learn how.

The reason so many people are bailing right now is because they don't have a good grasp of how the markets work and so act and react emotionally instead of rationally. Most have lost so much money now that they can't stand anymore pain and so are heading for the hills.

This happens during every bear market. The reason? Most retail investors want certainty, so they wait to buy until the market is so far up from the last bottom that they end up buying in near the top, then when the inevitable change of trend comes and the down cycle begins the lapse into denial and hold on hoping that it's just a minor dip. Finally in the final throws of the bear market, which we're seeing now they finally sell out, at the bottom.

There is no law that states you have to be fully invested in equities 100% of the time. Diversification is a many faceted thing and includes the ratio of cash to equities in your portfolio. The smart people were mostly out of the market and in cash earning interest by late December of last year. The result is that they have been making money not losing it and are now positioned with lots of cash to take advantage of ridiculously depressed prices when the bear market ends and the major trend reverses. They don't have losses to recover but rather earnings to build on.

The key is to be able to recognize major trend changes and that is really pretty simple but you have to be interested enough to learn how.

The first rule of investing is "Don't lose money."


3. http://knowingstock.blogspot.com/
http://knowingstock.blogspot.com/