We are Investors - Not Traders

The secret of successful investing (not TRADING) is to buy stocks when others are selling at "any" price.  You buy when the fear is high.  Trading is a different animal, since traders simply play trends.  They buy strength and sell weakness and hope that the trend continues.  It is a sad fact that successful book writers, and even strategists, know that the secret to strong acceptance of their book (or market comment) is to write/say what satisfies the psyche of the potential reader - the herd.  So, in today's world, you see the soap box crowded by those "dooms-dayers" kicking and scratching to get up on the lectern to tell their story of dooms day - the demise of America.

So today, the epic debt ceiling agreement has been passed to at least eliminate the Congressional stalemate for a while.  We're pretty sure that worry was blown out of proportion, and that was almost certainly considered the reason for the market's weakness last week.  Yet, the most exciting thing about this new legislation, is that both the super-liberal Democrats and the super-conservative Republicans HATE it. 

But getting back to the stock market...while the Congressional stalemate and threat of default has been worrying the market for a while, it now seems to be the economy that's worrying the market.  Nobody was too concerned about the expanding economy in February of this year, but now the "double-dippers" are back to haunt us again.  We know for a fact that the recovering economy hit some huge roadblocks in March.  Before that time, we had improving consumer sentiment, we had unemployment insurance claims dipping under that magical 400,000 level, and we even saw some better signs starting to appear in housing.

But in March, we witnessed the Japanese earthquake that totally stalled the important Japanese auto and auto parts industry.  Around that time, we also had very severe weather conditions that kept shoppers at home, rising gasoline and food prices, an increase in mortgage rates, and the beginning of the talks on the budget deficit.  Yet, every one of those obstacles is now better, so today's news is based on those after-effects of the environment in April and May. 

So today, we're saying we are as bullish (maybe more so) than we were in February.  We're not short-term traders, we're investors.

Click here to read today's complete Market Comment.

Don Hays

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