Afraid? You should be. And then again you shouldn’t be. Jumping into the stock market this year takes a lot of guts and in the present environment a tremendous amount of perseverance. But there is still money to be made out there. So above all don’t panic.
So what to do now, you say? Well for starters ask yourself THE fundamental question. Are you in it for the short term or are you here to play and to stay. If the latter don’t wait to finish up this article and buy now! Valuations for superb stocks across many sectors are now at historic lows-they are screaming “buy me!” However if the former is the case..stay out..at least until the end of the summer if not mid Autumn. Simply put: there will be extreme price volatility ahead and this will mean that fear and confusion will be the dominant sentiment in the market for some time to come.
This brings me to what is often called the fundamental picture. And today that picture more than ever is a global one. If you want to invest in the long term you can no longer count on the stock market to retrace its twentieth century American history. It will not. It cannot. What it will do is retrace a similar pattern on a wider geographical scale in countries such as India, Brazil, China, and even Russia (an economic group often referred to as BRIC). The US stock market will do well this century. Many others however will leap and bound in ways not seen since the golden age of global trade in the mid to late 19th century.
Ok that sounds wonderful, right? But what to do now?
First take a deep breath. Playing the stock market is still the best way to make a sizable return in the long run (defined as 5 to 10 years or more). Next, start reading up on stock markets abroad such as Germany’s Dax, London’s FTSE and Hong Kong’s Heng Seng. Try to become a regular reader and/or subscriber to the Economist, the Financial Times, Market Watch, and Bloomberg. After about a month’s worth of solid research-try your hand at the stock market without any money. That’s right play the market without money on a virtual stock market. The best one I know of is www.virtualstockexchange.com. There are many games and forums to join as well. And besides it’s educational and fun. I would recommend that you play the virtual market for six months before putting any real money into an e-broker such as E*Trade, for instance.
The next time we see each other I will be focusing on individual BRIC stocks. Until then I wish you a healthy and prosperous month! And never forget that old adage “Fortune belongs to the bold!” Good luck.