Irrational Anxiety

[SteveR]

CNNMoney had an article today on Irrational Anxiety in the stock market. http://money.cnn.com/2005/07/25/markets/anxiety/index.htm]

It states that investors are being overly affected by the news; gas prices, terror attacks, possible RE bubble, etc. I think it is also a case of large fund managers bloating and flushing the market too so they can turn a profit and dump shares. The news never seems to really explain the market ups and downs; it is more of an excuse and not a reason. There is much more going on under the surface than is ever reported on the news. Don't blame the average investor for being timid when as soon as the market makes a small rally the big investment houses rush to sell to capture a small profit so they can do it all over again. The small guy get hurt while the big guys get to show some gains for the year.

That being said, there is also a case to be made for many companies buying back shares to keep their cash reserves lower because they are heavy with cash right now. I believe investors are also heavy with cash and are waiting on the sidelines for the market to make a move. It is like a face off in hockey...everyone is waiting for the puck to drop and no one notices the guys robbing the ticket office.

 

[LOL!]

The author of the article is just a journalist who has to put words in his computer to make a buck. He used to write a column for MSN/Investor.

Here is an easy trick on how to beat "the market" that I learned quite some time ago. On any day that the stock market index of your choice is down YTD and there is a substantial drop, just buy lots of that index. No matter what it closes at the end of the year, you will do better than the index for that year.

I see that VTI is down 0.02% and SPY is down 0.6%, so if you had bought sometime today, you would beat the market this year. You don't have to be a little guy; you don't have to be a big guy, but you have to be in the market.

Of course, there were better opportunities in the last couple of months. No reason to be timid; no reason to be anxious; no reason to blame anyone but yourself for your performance; no reason to blame journalists for lame articles.

 

[LOL!]

Oops, my YTD numbers aren't correct in the previous post ... can't trust any websites anymore. SPY, IWM and VTI are up about 3%, 5% and 4%, respectively. Not a bad return for the half-way mark.

And if you had invested on April 28th, you'd be looking even better.

It's a great year so far. Don't believe everything you read in the papers.

 

[riskadverse]

Your link doesn't work for me.

The difference between an amateur and professional stock trader is -- the professional panics first.

 

[SteveR]

I am not sure why the link does not work but it is on the main money page for moneycnn.com for July 25.


http://money.cnn.com/

 

[lazyday]

Article

There have been irrationally cheap markets before.
Today? I don't think so. I am in the market though, as I prefer stocks to bonds, even at today's prices.

Here's where I got the link: Ted's links are great!