I was always told this by my London based American born Harvard educated currency salesman. Funny how I never heard this in kindergarten? The point is to emphasize that even something so simple is a powerful statement that needs to be respected in the proper circumstances. This is not like tickling a child who says stop and you continue. This is bringing reality to investing your or someone else's hard earned money.
"The market is going to rally on the results of the election"
"The market is going to collapse on the results of the election"
"The market is going to _____________ on the _______________!"
Come on boys and girls are we investors or what!
If you have ever been to Atlanta no doubt you have seen the Hurt Building. It is a magnificent flat iron structure that is truly one of the most beautiful and architecturally pure structures in the world (link: http://www.nps.gov/nr/travel/atlanta/hur.htm ).
It also has a fine restaurant, The City Grill, on the first floor and some brilliant money managers on the 14th floor.
There is a story of a successful real estate owner/operator who bought the Hurt building in Atlanta at auction on the Court House steps. After refurbishing the building the owner installed a office with a Quotron machine for his elderly but sharp father who liked to trade stocks.
For your youngsters, a Quotron machine was the green screen equivalently to the industrial revolutions for stocks. It replaced the Ticker Machine and hearing the word Quotron brings nostalgia to all those over a certain age even more than Drive In Movies.....
Anyway, the son shows his father the office and the prized Quotron.
Confident the father will be over joyed, the son watches as his father walks up to the Quotron, punches a few keys and just stares.
The son is confused and breaks the awkward silence with, "Dad aren't you happy with the machine?"
To which the father replies, "This is the wrong machine."
"Dad it's a Quotron, you can now get you stock quotes without having to call the broker".
"I know what it is but it is the wrong machine", said the father, "It gives me today's prices, I want the one that gives me tomorrow's prices!"
Back to point, Investors buy stuff they want to own. Own, possess, keep for a while. Not necessarily permanently own, but own until..... What? The What is the Objective. Objectives must be clearly defined to be useful. A specific target price, P/E or other reason to no longer own the specific investment. We own the stuff until we have a reason or reasons not to own it.
Market timing is buying or selling stuff in anticipation of a BIG MOVE! that will make us rich instantly. This is not unlike the guy who had a dream he was going to win the lottery and mortgaged the house borrowed money and bought lottery tickets. He bought a lot of tickets but not the winning one. He was incredulous that he didn't win. How could his vision been wrong? Honestly, I do not see much difference between this guy, the Millennialists who sell everything and market timers.
I missed the market!
I should have bought yesterday at the lows!
Why didn't I sell at the high!
As INVESTORS we key in on a few variables like low Price Earnings Ratio (P/E), high dividend, price stability and strong balance sheet. Nice simple boring stuff. We also like companies with strong statistical profiles to sell call options against. We want to own boring companies in this environment, nothing fancy just simple money making stocks. If P/E's go too high amd/or dividends go low, we sell and move on. No hard feelings just good memories and money in the bank. There is always opportunity available with our strategy. Sometimes we have to look hard for winners at the risk of loosing out on a good walk spoiled.
There are two types of general categories of stocks. Exciting and boring. Exciting stocks are sensitive to the business environment while boring stocks are less sensitive. Non-cyclical stocks is the home for the boring stocks. Companies whose fortunes are not so closely tied to the economy. Loosely interpreted this includes: stock food producers (Kraft Foods), non frills sellers (McDonalds), department stores (Wal-Mart), utilities (Duke Energy), etc.
Stocks can also gather in places called Sectors. Sectors are groups of "like" or similar companies. Some are known to be boring but stable. Occasionally individual sectors can stand out like a turkey to a Pilgrim. Major Integrated Oil & Gas is one of them. As a matter of fact so are related sectors like Independent Oil & Gas and Oil & Gas Drilling & Exploration. Recent issues in their industry have scared investors. FEAR of owning the stocks led to selling. The rush to sell the stocks have cheapened them - that old supply and demand thing came into play.... aggregate demand vs. aggregate supply/too many sellers vs. not enough buyers....
I love this stuff!!!!!!!
Anyway opportunity presents itself when this stuff happens, giving us reasons to buy stocks we would not have considered otherwise. These are not planned events, just transient opportunities. So instead of buying up the market or selling everything for lotto tix, we just quietly run our stock screens and look for bargains to INVEST our money in.
By the way how did that post election Bull/Bear market timing trade work out for you?
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