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The Market

25 May 2010 No Comment

Pictures are worth a thousand words…

6 Months S&P Chart (SPY)

6 Months S&P Chart (SPY)

The above chart shows just how fast the market can give up gains that are built over time.  Essentially, the last 6 months have been erased in 2-3 weeks.  A few lessons or reminders for today:

  1. The market is unpredictable
  2. Pretty much everyone is wrong when they predict the market – don’t listen to them
  3. Don’t buy into stock euphoria – be patient instead
  4. It’s probably good to ignore day-to-day markets
  5. Dividend-based cash flow should be your focus when investing
  6. The market often moves fastest when investors are most complacent
  7. The market could go much lower or could go higher – it really doesn’t matter – if it goes lower, I’ll buy some stocks, if it goes higher, I won’t

I’m starting to like my strategy more and more of waiting for a crash, then buying dividend stocks.  You could think of it as follows:

Save money & collect dividend cash -> Wait for crash -> Deploy cash into solid, dividend stocks -> Repeat

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