Stock Market Fundamentals: Time is the Essence

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2647 - Stock Market Fundamentals: Time is the Essence

Stock Market Fundamentals: Time is the Essence

by: RNCOS

There are those who like to invest in stocks and shares with the belief that they are fuelling the economy or the industry they trust in. They and#8216;buy and holdand#8217; shares for longer periods hoping to be rewarded with bigger fortune. This may sound appealing to most investors seeking long-term goals like saving for a college education or a peaceful retirement. But then the tour to the exchange is a bit adventurous, for the future is blurred and meets no end.
Though many advocate the and#8216;buy and holdand#8217; philosophy on the grounds that it lowers your taxes and saves on your commission, the share holding may ultimately yield low profits. Eventually when the time comes to sell, it may be a bear market. Even if the market were to be bullish, there is the possibility of inflation eating into the dollars you made.
In the last 100 years in the history of trading there have been 30 occurrences of a bear market. The and#8216;correctionsand#8217; that followed never brought up the market to the post bear market position. It is a fact that every stock exchange faces a bear market periodically as a part of an established linear cycle. Though brokers always believe the market will come back, sometimes, it may be too little or too late for many.
While trading in shares or stocks, the foremost aim is to protect the original cost of your holding. In and#8220;market timingand#8221; you buy the shares and hold them in your portfolio on line for further trading. Shot term bullish and bear market trends are required to be monitored so that one knows the moment when to buy or sell. The and#8216;market timingand#8217; investor aims to keep his losses low and protect his capital too. He is more sensitive to the volatility of stocks and shares. He believes he is lowering his risks and looking at long time trading gains that are consistent.
The and#8216;Buy and Holdand#8217; believers have great faith in utility stocks. However exchange records reveal that after every crash the utility stocks index never manage to reach back to their old heights. Instead of parking your dollars in shares for a long and doubtful period, it is better to buy and sell over shorter periods of time pulling out and trading in according to what the stock exchange market prices indicate.
One must not mistake and#8216;market timingand#8217; trading as speculation. Here the investor has a different goal. He is like the businessman who buys and holds goods as per the trends in the market. He will want to sell the latest goods in the market when they are still in demand and get rid of those that are no more in fashion.
Even high-quality stocks and shares have suffered from the bear market. and#8216;Buy and holdand#8217; approach does not appeal to those who find reading the market regularly and keeping themselves alert at all times an exhaustive exercise.
But once you master the art and#8216;market timingand#8217; by keeping your ears to the ground and acting on the signals, you will realize you have made your gains while others were simply waiting.

About The Author

RNCOS (rncos.com), formed in 2002, offers outsourcing solutions for your business needs and aims to put an end to your information pursuit. We provide e-publishing solutions, which constitutes articles, newsletters and content for magazines and bespoke work. At RNCOS, we provide you complete e-publishing solutions and online help. We offer the best in technical writing, editing, and illustration for digital and printed documentation. For further information write us at info@rncos.com.

This article was posted on August 07, 2005

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