Bull, Bear, Why Care?

August 9, 2012 11:16:00 AM


Certainly, 2012 started with a nice move in the U.S. stock market indexes.

However, like 2010 and 2011, the second quarter of 2012 got quite ugly for the markets - particularly international and emerging markets.

Interestingly, I have noticed lately, many stock market pundits have thrown their 2 cents around in talking about the recent economic slowdown and a stock market correction.

Frankly, I have to admit, I am a bit surprised to hear as much negativity as I have heard lately about the economy and equities. It is a change from what normally happens as it seems like most of the time, most pundits are quite bullish on the stock market.

Not to be cynical here (as I would never do such a thing!), but, with all the negative talk, it almost seems like they are trying to talk down the market so they can get invested!

Remember, ALWAYS be ready for a stock market correction!

Of course, as many people are aware, when it comes to investing, sometimes it makes sense to do the opposite of what everyone else is doing!

When everyone is so negative, maybe that means the markets will probably keep going higher!

Of course, as my readers know, I am not in the business of predicting what the stock market is going to do over short periods of time.

Why not predict what the stock market is going to do?

Very simply, you cannot predict an irrational system and emotional investors. Remember Warren Buffett's quote: he stock market is nothing more than an excuse to see what people are willing to do foolish today.

So, trying to predict which way the stock market is going to move in short periods of time, is a losing battle. The problem is, if people don't make predictions, who will listen to them? Unfortunately, we live in a addiction to prediction world.

This is why I fundamentally believe, one of the keys to successful INVESTING is buying into quality companies and continuing to do so over time, not the stock market.

Of course, there are risks when you invest in a company as the fundamentals may change and the value of the company decreases over time. However, this is why one must diversify appropriately based on one's investment objectives and tolerance for market volatility and investment risk.

At the end of the day, bull market or bear market, why care?

A major key to successful investing has always been and will always be, the process of investing in quality companies and taking advantage of market volatility to continually invest in companies on sale over time.

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Mark Pearson

Mark Pearson

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