The market right now offers a good illustration of the differences in trading and investing styles. The indexes are extended, yet they are not yet rolling over. What is the right action for you to take? Should you be cautious, or should you stick with the upward trend?
There is no single best way to trade or invest. It is highly subjective and will depend on many considerations such as time frames, risk tolerance and your confidence in your predictive powers.
One school of thought, which is well represented by Real Money writer Doug Kass, is that there are numerous warning signs right now and that significant downside lies ahead. Doug has a long list of reasons to support his thesis and is confident that he will eventually be proven correct. I suggest you review his arguments, so that you are aware of what many market professions are thinking.
This morning on @realmoney
— Dougie Kass (@DougKass) July 21, 2020
* The Bizarro (Superman) Market
* What a S&P Inclusion Could Mean for $TSLA shares
* What does the Chevron/Noble deal mean for energy stocks
* IT IS Deja Vu Over Again (https://t.co/GuKT4srByN boom vs today)
* More divergences, narrowing leadership
But my view of the market is the polar opposite. Rather than anticipate what might happen next, I trade the price action in front of me today. I still see good trades, so I take them and I keep pursuing new buys until they stop working. I agree that the market is extended and frothy, but there is still good opportunity and I'm making money, so that is my focus.
I expect that a day will come when the market is hit hard and I will lose money. I'm not too worried about that, because, I hope, will be racking up enough profits right now to soften the blow. I am not going to be negative about the market until I see some price action to justify that view. I find that the opportunity cost of caution to be far too high.
What works best, depends on you. I'm confident in my ability to find good trades and to move quickly, so trying to time a market top is of little value to me. What is most important to me is having a strategy to deal with what the market might do next.
Currently, the most logical and easy thing to do is to be more cautious. The hard thing to do is to keep pushing for more gains. Typically, the hard thing pays better than the easy thing, but if trading wasn't difficult, it wouldn't be so potentially lucrative.
"trade" - Google News
July 23, 2020 at 11:32PM
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There's No One Way to Trade - TheStreet
"trade" - Google News
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