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Markets Swings

January 31, 2012 – 6:08 pm

We have had a long run starting in the middle of December of rising stock prices. We are now near the highs made last May and June. Last summer we fell to the lows of the year and at that time we suggested that you buy the market. Today is a time to begin to sell the market.

This moving money in and out is often called market timing and it has not been in favor with established opinions by the large institutions or for that matter the SEC. However, ever since the dot.com collapse of 2000 the stock market has been in a Secular Bear mood. If you bought the indexes in 2000 you would still be at loss today in 2012. In the 1990’s we were in a Secular Bull market and buy and holding stocks would have worked, but no longer. At some point we will return to a Secular Bull market but until then you need to be more cautious.

Recognized swings in the market such as we have seen for 11 years is a prudent way to reduce risk and try and maximize return. It does not always work but often enough to make the effort valuable. It does not mean you sell completely out and then put it all back in at one time. It is more of an effort to capture as much of the upside and not be caught unprepared for the downside. Then when the market completes its correction buy back in those stocks that are on sale.

It is never easy but it is rewarding.

Good Trading
Steve Peasley

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