Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice! As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on information on this website.
It was a lousy day in the market.
First we had the assassination of Benazir Bhutto in Pakistan letting us all realize once again how fragile each life is as well as how willing some people are to change history through violent means. The market didn't like that kind of unsettling news and slumped along with increases in oil prices.
In addition, real estate prices are slumping, jobs aren't being created in a vigorous fashion, and consumers weren't buying adequately during the holiday season to set any kind of records. Quite the reverse actually.
But I don't know which direction the stock market will move tomorrow or next week. I don't know whether we are embarking on a prolonged bear market correction or if tomorrow will mark the beginning of a new bull phase of trading.
I don't mean to disappoing anyone but I cannot read the future. I can guess, we can all guess, but nobody really knows these things.
So how do I respond to this turmoil? I stay with my system. I restrict my ownership to high quality companies that are doing well---growing their revenue, earnings, free cash flow, and maintaining outstanding shares as well as a solid balance sheet. And then I respond to market activity by evaluating the price action in each of my holdings. I do not try to guess their moves either, but sell quickly if they incur losses and slowly if they yield gains. And with these sales I either add to my exposure to equities or bias my account more towards cash. In other words, I let the price performance of my existing stocks determine my own strategy.
I don't know if this is the best way, or even the most successful approach. Sometimes, like I yield to the urge of doing a 'trade', I also have the inclination to throw in the towel and move everything to cash. But I don't. I have stopped trying to guess the market direction. Maybe you are a better guesser. As for me, my own portfolio has moved me to 12 positions out of a maximum of 20 and a minimum of 5. My portfolio is literally 'speaking to me'.
And I shall listen.
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