Thursday, June 27, 2013

If you don't know what to do when face with Negative News


 Recently, few of my clients call me. They wanted to know what should they do with their investment in stock market, especially when negative news from China about some banks having financial problem or US want to end the QE.. Most of them want to know, is it time to sell, or continue to hold the position...
.
I think if an investors use the correct approached for investment, they should not influence and feel panic by this kind of negative news. In fact, I am quite welcome this kind of news, without the news how can stock price go up or down and let the smart investors make the money?
.
Ask a question, are you an investor or are you a speculator who look for one night stand? If you are a speculator, then, yes, you should run because most of the stocks are bought base on trend. If down trend start, just run first. If not, the money will be tight down. They will wait for the next opportunity or when the clear trend to form before enter into the market.
.
However, if you are an investors, look at the stock from business perspective. As long as the company is making money and the profit is keep on increasing year after year, there' no need to sell the stock. In this case, sorry for Gold investment, I can't see any benefit from business point of view, that's why it keep on falling in price after making the record high of USD1900.
.
The combination of investors and speculator had make the market imbalance, hence create the movement of stock price. This is good news for experience investors, as they know, em... it's time to make money again. In the end of the day, only experience investors know when heavy rain come, it's time to take out the water containers and prepare the keep more water. Time will come when the weather turn hot, everybody is willing to pay high price in order to exchange for water!
.