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Markets are tough right now – an understatement you might say. So what to do?
Well if you have been in the market for a long time and your holdings are in good condition then perhaps you just ‘sit pat’. I don’t think we are into a sinister bear market – although I am sure there are some that may disagree – but having said that it is a good time to spring clean. Any stocks that I think are doubtful I sell. Good riddance.
The DOW has hit new lows and could go lower but I expect it will hold within the trading range I referred to a couple of weeks ago. Most other exchanges are in what I would still describe as a reasonably orderly retreat. Pullbacks are never pleasant, especially when we have been watching our profits grow handsomely each day.
But these dips are important consolidation before the next move. One of the problems with the August scare was that we did not see any consolidation. It was sharply down and sharply up and it was ‘London to a brick’ we would see some further softening.
The trick now is to find the bottom of this retreat. I don’t mean the exact prices turning point but rather as close to the low as we can reasonably expect to predict. Always remember that indices are only a guide and before they hit a low there are some stocks that are ahead of the curve and are starting to emerge from their lows. The market is not so orderly that all stocks turn in unison. And that is a good thing because even though it may be tough to back winners at the moment there are still opportunities. We just need to work harder to find them.
In these kinds of markets an old saying applies: ‘When the going gets tough, the tough get going’.
Enjoy the ride!
Tom Scollon
Chief Analyst
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