Deprecated: mysql_connect(): The mysql extension is deprecated and will be removed in the future: use mysqli or PDO instead in /home/a26f9f83/public_html/articles/includes/config.php on line 159
Buying Stocks and the Importance of Correct Timing > NetSparsh - Viral Content you Love & Share

Buying Stocks and the Importance of Correct Timing

An investor can find and research the best stock on the market, one with huge potential but if the general market indices are negative, it will most likely be the wrong time to buy. A stock with tremendous accelerating earnings, rising sales, an up-trending chart pattern and a strong industry group may sound excellent to buy but will mean absolutely nothing if the market is positioned to move in the opposite direction of your expectations. As soon as a stock is purchased, the time comes for an investor to make a decision to hold or to sell. If the position shows a profit, hold as your judgment is correct. If the position shows a loss, cut it quickly and don't rationalize the situation before it doubles in size. Timing will play an important role in determining if you are right or wrong.

Losers must be cut quickly, long before they materialize into enormous financial disasters. They company and stock may not be a loser but rather your timing may be premature to a strong movement, forcing you to sell on a pullback. After a stock is cut from your portfolio, the transaction must be forgotten about and eliminated from your subconscious mind and/or emotional bank. The trade must be studied to capture the true essence of your mistake but the specific security involved must be blocked from any sentimental attachments, allowing you to consider reinstating the position at a higher level. This repurchase may take place immediately or well into the future but the important fact is that you were wrong with the timing on the initial position. The timing, also known as the 'M' in CANSLIM by William O'Neil, may have been wrong even though all fundamental and technical criteria related to the individual stock seemed to be perfect.

A quote from the great Gerald Loeb: "Cutting losses is the one and only rule of the markets that can be taught with the assurance that it is always the correct thing to do."

The wisdom shared by Loeb is easier said than done. Humans like to take profits and hate taking losses or admitting that they were wrong. Pride and ego distorts the clear thinking process that every investor must posses when following clear cut rules that provides insurance to their cash stake. Even tougher, humans refuse to repurchase anything at a higher price that they sold it previously. As Loeb states, only logic, reason, information and experience can be listened to if failure is to be avoided.

It is advisable to make a "test buy" in a shaky or unstable market which allows the investor to assess the general conditions with minimal risk but still maintain an emotional attachment. If the position goes bad, a small loss will be realize but the damages will be limited and the investor's pride and ego can be repaired rather quickly. In a sense, the investor was half right by only initiating a partial position also known as a "test buy". If the market was trending up, a "test buy" would not have to be established as the market direction would have been clear from the beginning.

When it comes to timing, an uneducated investor may realize better gains during a solid bull market based on pure luck than a seasoned investor will return in a sideways or unstable market. Following the trend will be the most successful route to consistent profits over the long haul. By watching the general market indicators, such as price, volume and daily new highs, an investor should know exactly what type of environment they are trading. The most important factor weighing on the stock market is the presence of public psychology, even more so than any fundamentals that the most intelligent academic analyst can compute. Technical analysis along with confirmation of the market trend allows us to see the combined thought process of the general public and tells us if the timing is right to buy or short a specific stock, regardless of the fundamentals.

In conclusion, we must understand that certain situations are only applicable during specific times. Buying leading stocks during a down trend is a sure way to multiple losses that are cut quickly. Shorting stocks during a raging bull is another sure way to financial disaster and margin calls. Don't get discouraged if you take a few small losses consecutively as this is your rules telling you to stay out of the market at this time. The timing may be off even though the stock and research is favorable. Why would you swim upstream to reach your destination if you could jump in a boat and row downstream with the current another day? Before you ever start to immerse yourself into researching a stock to purchase, make sure you know the exact environment of the market and determine if it coincides with your objective. If it doesn't, get ready to get slaughtered, especially if you don't follow strict rules to cut all losses quickly.

Chris Perruna - http://www.marketstockwatch.com

Chris is the founder and president of MarketStockWatch.com, an internet community that teaches you how to invest your money with solid rules. We don't stop at just showing you our daily and weekly screens, we teach you how to make you own screens through education. Through our philosophy, you will be able to create your own methods and styles to become successful.

In The News:

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news

Steady dividend-paying stocks are better money makers than bonds
MarketWatch
Rising U.S. interest rates could pressure stocks and make bonds more attractive — but maybe not as attractive as dividend-paying stocks would still be. There's a case to be made that solid companies which have paid dividends reliably and regularly for ...


USA TODAY

US mutual fund, ETF investors dump domestic stocks as trade talks intensify -ICI
Reuters
NEW YORK, Sept 19 (Reuters) - U.S. mutual fund and exchange-traded fund (ETF) investors pulled money out of domestic stocks for a third consecutive week as a new round of trade talks intensified, Investment Company Institute (ICI) data showed on ...
Best And Worst Q3 2018: Small Cap Blend ETFs And Mutual FundsSeeking Alpha

all 53 news articles »

Business Insider

A group of investors with $16 trillion at stake is struggling to find success, and its survival is in jeopardy
Business Insider
Stock pickers have one overarching mandate: Deliver more returns than your benchmark index. But fewer of them are achieving that, according to Morningstar's latest semiannual report on mutual funds, which dives into how active funds stack up against ...

and more »

US mutual fund investors flee domestic stocks in latest week: ICI
Reuters India
NEW YORK (Reuters) - U.S. mutual-fund investors sprinted out of domestic stocks at the fastest pace in nine weeks as trade talks seemed to deteriorate and social media executives were grilled by lawmakers, Investment Company Institute (ICI) data showed ...

and more »

CNBC

Fidelity Investments doubles down on no-fee funds with two more launches to cover US stock market
CNBC
Fidelity Investments raised near-$1 billion in the launch of the mutual fund industry's first-ever no-fee index funds in August, and it is now doubling down on that success. On Sept. 18, Fidelity will launch two additional zero-expense ratio index ...

and more »

Index vs. actively managed funds. There's a big difference
Lowell Sun
Index funds are mutual funds that are designed to track the performance of a particular index or asset category of stocks and bonds. Unlike actively managed funds, index funds make no attempt to select which investments will be hot. They simply invest ...

and more »

24/7 Wall St.

Avoiding the Next Crash: 10 Alternative Investments Outside of Stocks, Bonds, ETFs and Mutual Funds
24/7 Wall St.
It may seem hard to imagine that it has been 10 years since the United States was in the grips of the financial crisis. The crisis is over and the bull market has continued to thrive in 2018, but this run-up in stocks is also now closing in on 10 years ...


Business Insider

GOLDMAN SACHS: These are the 19 companies that matter most to America's largest stock pickers
Business Insider
Mutual funds are pulling money out of financials and rotating into healthcare stocks, according to equity strategists at Goldman Sachs. Goldman examined 499 mutual funds with $2 trillion in assets under management. The share of funds beating their ...


Investor's Business Daily

Are Tech Stocks Out Of Favor? Watch Amazon, Nvidia, These Leaders
Investor's Business Daily
Amazon.com (AMZN), Nvidia (NVDA), Adobe Systems (ADBE), Workday (WDAY) and ServiceNow (NOW): Top tech stocks testing their 50-day/10-week lines. Amazon stock is testing its 50-day line for the first time since April. Nvidia stock, Adobe stock, ...


Investor's Business Daily

Best Mutual Funds Buying Semiconductor, Medical Stocks
Investor's Business Daily
The semiconductor sector led the list, with seven chip-related companies earning a spot, including IBD 50 stocks Integrated Device Technology (IDTI) and Nanometrics (NANO). The largest semiconductor investments from the best mutual funds were in ...

Google News

Dont Ask Your Broker

Unfortunately, most of you who are reading my column are... Read More

Why Is The Macedonian Stock Exchange Unsuccessful?

The Macedonian Stock Exchange (MSE) is not operating successfully. True,... Read More

Evaluation I

An insane person cannot evaluate an insane evaluation system.As you... Read More

How to Make Big Money Safely in Stock Market

(1) Stock Market is Tough Place to Make Any Money... Read More

Managing Investing and Stock Market Risks

Reduce your investing and stock market risks by:Setting your sights... Read More

Eternal Sunshine

There is a current movie entitled "Eternal Sunshine of the... Read More

The Seven Mistakes All Novice Traders Make and How to Correct Them

We learnt the following the hard way! If any of... Read More

Is the Stock Market for You?

Many people would like to diversify their portfolios to expand... Read More

Is Active Trading The Answer?

One of the main reasons many of us get into... Read More

Money, Insanity and Wall Street

Money: the most charged word in the planet. It means... Read More

Hedge Fund Advertising

Have you seen all those big full page ads for... Read More

Outsourcing

It's about time someone spoke the truth concerning outsourcing. The... Read More

How Much Information Do You Need?

You have decided to buy some stock or mutual funds,... Read More

DIY Portfolio Management

Exchange Traded Funds (ETFs) are growing. Investors are choosing low... Read More

The Three Little Pigs Went to the Stock Market

Three little pigs went to the market to stock up... Read More

Stocks Options Trading

Let's assume that you want to make some serious money... Read More

The Stock Market - Part 1: Believe It Or Not, Its Always Been Your Best Friend And Always Will Be

Regardless of the fact that the world's stock markets have... Read More

Market Success

Who are the successful investors?There are those who follow the... Read More

Mousetrap

The spring-loaded rat catcher is the ultimate low-tech device invented... Read More

Maximizing a Stock Market Investment

Maximizing a stock market investmentThere are several factors an investor... Read More

Oil Stocks As A Long Term Investment

The demand for world oil is increasing while world reserves... Read More

Hedge Funds: the Good, the Bad, and the Ugly

Alfred Winslow Jones started hedge funds in 1949. He was... Read More

Pamplona, the Wild Investment Bulls

You remember (they show it on TV every year) the... Read More

Investing in the Stock Market

From the book 'The Stockopoly Plan' by the author Charles... Read More

The Elephant

Four blind men were asked to give a description of... Read More