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Originally Posted by lookout123
1) Who is this "we" you keep referring to?
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The we is layman. We watch what so many market analysts say. To say ignore them is it lose a valuable source of information as well as take some of the fun out of it.
For example, important in what each of 'they' say are the reasons why. The 'whys' can quickly identify those who know only by playing numbers games from those who know by acutally understanding the a company is doing.
Same applies to finaniclal markets. Many appear to be taking significant losses verses a smaller number who saw this problem many years ago and hedged appropriately.
Meanwhile, numbers repeatedly reported from various sources noted how stock brokers underperform the market by about 1%. A summation of mutual funds (that are not indexed) also demonstrates the problem. Mutual funds tend to underperform the market by about 1% - sometimes 2%.
Recommending one to ignore the analysts is good if the investor blindly hands his money to others for investment. Becoming a good investor is not hard as long as one limits to industries that he understands. As Peter Lynch noted, the private investor with about 5 stocks can often outperform the market. But that means knowing the company, understanding its industry, and keeping an eye on those market analysts who can subvert or upend the market with their fears.
Applying to current situations - caution is advised. These market analysts have a history of misreading the numbers, promoting things as good (as they usually do) and then suddenly going into panic mode. This tends to occur in October but has lately occured in months earlier.
Having said that and if believing in an industry that is poised to get or stay on track, then one now would be watching some investments that should be very good buys in these next few months. But again, that means watching those market analysts so as to understand their and their peers emotions.
Investors in Google, Goldman Sachs, Toyota, and Citigroup have recently taken a beating. I believe each may have lost their entire profits for the year in but a month. The first three appear to be very solid companies. Could one take advantage of investments at fire sale prices?
Or invest in Cisco that is now at 150% of the price last September even after the sharp downturn? Or Intel that is now at 133% (did you notice how Intel started chewing into AMD)? Or Apple at 185% even after the downturn. Do we invest based upon these numbers? Both reasons are usually offered by those analysts. Neither are, by themselves, significant reasons for making a decision. But listening to those analysts who promote this reasoning should make it apparent whether he makes money on promotion - or actually understands the investement, its industry, and its products.
Listen to those market analysts. Sometimes they can draw attention to a gem. Use their emotion to understand the hype. Don't listen to them for what to do. Listen to them to, instead, understand the whys.
Now is a good time for making a decision if even only talking about 100 shares. I don't waste money on lottery tickets. 100 shares on the stock market is currently is far more fun than any lottery tickets. I don't like buying losers - such as lottery tickets. Second guessing market analysts is also part of the fun.
Right now is when it gets very fun.