In the current financial crisis people are getting more and more concerned with their investments. For years all investment advisors kept telling us: ?Just buy stocks for the long-term and you?ll be fine? ? ?Stocks and real estate always goes up in the long run?. The investment environment has changed. No longer do investors have the trust needed to throw money at a company that they think ?has a great story? or that maybe in 3 years might be profitable.
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The sad fact is that we are seeing a bear market that is likely to dominate the financial environment for many years to come. Let?s look at the last big bear market many people might still remember: The bear market of the 70?s. To be exact: The bear market from 1972 through 1980. Nobody was talking about investing for the long term. Everybody was trading. Market timing was the art people wanted to master ? not stock picking.
Every time has its own strategies: Stock picking is for bull markets ? market timing for bear markets.
The reason for this is simply that in uncertain economic times we just don?t have the sufficient trust in the future. We don?t think stocks will rise higher and higher. Whenever prices surge we think: It is better to sell now: It will fall soon because it has risen so fast. This is the mentality of a bear market: Investor psychology is tuned into trading and market timing. We have to adapt to the current times if we want to be successful and make money.
Skepticism and fear are the predominant feelings in uncertain times. These feelings make us worry, they make us doubt ? and eventually sell!
So if you have been taught to buy and hold it is time to rethink your investment strategy. There will come a time when buy and hold will be profitable again. However in the uncertain times we are in you should focus on your short term trading abilities again and try to time the markets. Timing is much more difficult that stock picking ? you need to be able to predict market moves and act fast. In this market only the agile and smart trader will survive.
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Source: http://victory-vc.info/online-stock-trading-investing-day-trading.html
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