In reading through some research this morning, I came across a staggering bit of news:
- over the past 2 weeks, investors (both in Hedge Funds and Mutual Funds) have pulled over 35 Billion dollars out of the stock market and have moved that money into money markets (cash)...this is the 2nd largest liquidation of stocks/assets since the data started being tracked in 1979; this helps to explain why the markets have been moving down in almost a straight line over the past month (markets have been down for 4 consecutive weeks now).
What does this go to show? The average investor sells on the way down and takes losses on their investments, where the more prudent thing to do is to stay on the sidelines, hold on to the investment positions that were initially bought for fundamental and strategic purposes, and wait for the "smoke to clear" and start to buy stocks as they go on sale...
As hard as it is, buy low and sell high, and try not to do the opposite. Meanwhile, the financials (which I view as being the best place to start putting money to work) and technology continue to struggle to find their footing - and of course Gold is the worlds fair...be careful, because most times the worst investments are the ones that are overcrowded. Think about it this way, if a bunch of cows in a pasture are all eating the same grass in a specific section of the farm, sooner or later the supply of that "grass" will dry up as demand for such becomes to great to sustain itself; be careful not to follow the crowd.
In other news, the dictatorship in Libya seems to have come to an end, and as the political uncertainty in that country (which sports a fair amount of oil supply) settles down, oil/gas prices should start to come down in price. This will serve to put more spendable income in consumers pockets and will in theory spur retail spending..and that is subsequently good for the economy.
