I braved the market storm and bought some stocks on Friday (about $700k in Citibank, Coach, Blackberry); for some reason I got bounced out of Blackberry (RIMM) this morning … I can’t tell, but maybe I accidentally set my trailing stop at 1% instead of 8%?
I must admit, I’m just playing at the moment (see my earlier post: http://7million7years.com/2008/01/27/when-to-bail-out-of-the-market/ ).
Generally, I admit that I am stock market pessimist … always have been … but not any more … maybe!
This is the point in the post where you say: “hang on … when the market was going UP you were a ‘stock market pessimist’ and now that it’s crashing DOWN you’re suddenly a ‘stock market optimist’? Whattup????!!!!”
Let me explain …
Everybody has ways of making (or losing) money that they are most comfortable with … mine happen to include: businesses, property (residential and commercial, buy and hold), and some other stuff that I will tell you about in upcoming posts.
Fortunately, these happen to be the preferred assets of the Very Rich … just dumb luck and good genes on my part … I suspected but didn’t know for certain that they were the preferred asset classes of the very rich (neither did anybody else) until the book that I told you about in a recent post came out (follow the link just under the chart and read the book exerpt: http://7million7years.com/2008/01/25/how-much-does-it-take-to-be-rich/ ).
So, I was nervous about stocks in general, until I came across Phil Town’s excellent book on stock market investing called Rule # 1 ( http://philtown.typepad.com/phil_towns_blog/aboutbook.html ). Get it and read it!
The book told me how guys like Warren Buffet find undervalued stocks … I just followed the methodology to find my own favorite stocks (I’ll write a post specifically on this) and played a bit in the market with them.
I only invested $1 mill into 4 or 5 stocks … promptly losing $100k … but, I had the opportunity to learn Phil’s process and put in my ‘tweaks’ (Note to self: delete ‘tweaks’ … sometimes it’s best to just follow the formula).
Some of this was learning, some of this was not following the system exactly, some of this (a lot) was bad timing … subprime just as I was fiddling.
This is not a post that says that you should be in the market now … but SOON (where ‘soon = 1 month => 1 year, see: http://7million7years.com/2008/01/27/when-to-bail-out-of-the-market/ ) … until YOU are sure, there’s nothing wrong with staying in cash (see Phil’s excellent post on this subject http://www.philtown.com/phil_towns_blog/2008/01/cash-is-good-un.html ).
As Phil says: “Now, go play!” …