Buying Opportunity or Bull Trap?
Friday, August 24, 2007 | Teeka Tiwari
I’m a fan of concise, to the point articles, and so in that vein I will be keeping this week's article brief.
Talk about closing the barn door after the horse has fled: Lehman just announced that it's closing its sub-prime unit and laying off 1,200 workers.
I saw the brokers make the same mistake back in 1998 when emerging markets blew up. Every major firm on the street closed their emerging market desk ... but guess what? From 1998 to present day, emerging markets have SPANKED the returns from any other market!! Take a look at EEM. It's the Emerging Market Index. It wasn't around in 1998, but since 2003, it's risen from $35 to as high as $144!
Can you say DUMB?
My point is that even pros panic and make the wrong decisions, so it’s understandable that individual investors may do the same. It’s our job here at Tycoon to help you break away from those conditioned responses.
Even as the average investor sits reading this, fearful of getting back into the market, the big money boys are pouring back in.
We are going higher here, period.
We may have one more lurch to scare out the last of the weak hands, but the pendulum is starting to swing the other way.
You throw a rock right now, and you’ll hit an investment opportunity.
The hottest groups currently appear to be the brokers, banks, and finance companies. These are the sectors that led us down, and now they appear to be the sectors that will lead us back up.
This is a great time to use Exchange Traded Funds (ETFs) if you are still reluctant to take individual stock risk here. Remember that ETFs' biggest edge is the diversification that they provide, so make sure you own well diversified ETFs. Yahoo Finance has a great section that breaks down ETFs by sector and relative performance, and you can FIND IT HERE.
There is really not a whole lot more for me to add, other than to reiterate that it is now time to start buying stocks again.
(Please let us know what you think about Teeka Tiwari's article.)
Rate his article here »
Rate his article here »
Teeka Tiwari
Chief Investment Officer
<