Random ramblings of a mind damaged by years of disuse and abuse. Also a place to go to be bored to tears.
The Random Comic Strip
Words to live by...
"How beautiful it is to do nothing, and to rest afterward."
(The right to looseness has been officially given)
"Everyone carries a part of society on his shoulders," wrote Ludwig von Mises, "no one is relieved of his share of responsibility by others. And no one can find a safe way for himself if society is sweeping towards destruction. Therefore everyone, in his own interest, must thrust himself vigorously into the intellectual battle."
Apparently, the crossword puzzle that disappeared from the blog, came back.
Friday, August 5, 2011
What goes up must come down
The longer I dabble in it, the less I understand about the stock market. Yes, I dabble. That means I risk very little in the vain hope that I will gain a lot. It doesn't work that way, of course. But I have done ok. I skim from my profits from time to time much like the mob skimmed from the House back when they (fairly openly) owned Las Vegas. To do that, you must actually have a profit to skim from. Therefore, I must have done well enough to allow it.
I probably do as well as I do because I do not listen to the "experts" on TV or in the financial media. I do actually listen to them, I just don't follow their advice. You see, those "experts" always seem to recommend stocks and funds that are trading at 80% or more of their 52 week highs. Following that advice would be like listening to realtors in 2006 and buying a mini-mansion.
So, as I dabble, I do it cautiously. No day trader here.
But this past 10 days has been just plain wacky... and severely unnerving. Down a thousand here, a thousand there, then up almost as much and even more.
When the holdings drop so quickly, the urge to get out becomes strong and quite attractive. It's a bit like that bar back when you were single, only in reverse. The later it got, the better some of the prospects looked. In the market, the more it drops, the more you want to bail out. But that is when you have to resist.
Those with much greater reserves than I see a market like this as a great opportunity. They are right. I have also dabbled in casino gambling and this market is like playing craps. If you are not (and even if you are) holding the dice, you want the point not to be made; you want the dice to roll and roll and roll without the roller getting his point or crapping out. Meanwhile, you make bets on various possibilities and (mostly) cash in. The market recently has roller-coasted up and down and up again and down again... just like one of those rollers who can't make his point.
The clever ones, the successful day traders, discern patterns and rhythms of various stocks. They buy on the perceived dips and sell on the perceived peaks. Most folks end up buying on the peaks and selling on the dips.