The Investors of equity market are optimists. Pessimists and non believers invest in Fixed Deposit and Gold. They keep a self help kit with a torch light , essential medicines , a bottle of drinking water , some canned food just below their bed . Well tsunamis do happen ... 9/11 happened , Lehman Brothers happened .
For once forget about the ' out of the blue ' incidents . How did everyone fail to estimate the housing bubble in US. After all on hindsight it looked so obvious. Moody's was rating those assets consistently as the best investments .
Having decided that we are optimists we have to decide whether we are traders or investors . At least we have to decide whether a particular share we purchase today is for trading or investment .
One of my close relatives is a 'trader' in equity market . He purchases good stocks , then sells them off as they go up by 15 - 20 % and purchases other stocks. I think its a good strategy . However the day the market corrects 20 % he freezes into inaction. He becomes a long term investor . So you see the problem .
US Fed wants to increase interest rates . EU wants to continue with QE after September if need be . China has slowed down and is devaluing its currency to buy growth . A perfect storm ?
But do we stop investing or trading . NO.
There is this story . And like all stories has beautiful men and women in lead roles :
One Mr Tom was standing in front of the sea at Pattaya staring at the waves . Ms Lilly saw him and asked him what are you doing ? Mr Tom said I want to take a bath, but I am waiting for the sea to quieten down ... So you get it ...
Give it a thought and share your experience .
Have a great weekend !!