Sunday, March 13, 2011

Stock Market Strategy

What NOT to do
Subject of the week is the stock market. Whether stinking rich or moderately wealthy, nobody wants to invest in it at the moment. When it comes to money we have long memories and most of us got burned in the last five years, losing at least half if not all our investments. We are still licking our wounds.

The above graphic is a fine illustration of how you should not play the market, but unfortunately it's what a great many people do. They get greedy and buy when the market is going up and fearful and sell when the market declines.

The obvious strategy would be to *invert* the above graphic and repeat until rich.

When approached this week by a client for a suggestion of where to put his money, I recommended property. The bubble has burst and there are great deals out there in certain areas for those who are solvent. If I could get another mortgage, I would jump at the chance to buy a rental property with slow long-term gains. If I had an inheritance or tax refund this is where I would put it.

When shopping in the stock market, be frugal. See what's on sale and pick something that will still be valuable in years to come when you retire.

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