Thursday, February 23, 2012

Still Waiting For That Correction

I wrote last month of my hopes for a correction, yet none has come. I think that simply proves that the more you try to predict the market, the more you'll likely be frustrated. There are many, many examples out there of studies showing professional stock pickers and market timers handily under-performing the general market. That's why I continue to stick to my plan of investing in quality and attractive dividend growth stocks every single month, no matter what the market is doing.

The Dow Jones Industrial Average is up 5.9% YTD, and we're not even two months into the year. The DJIA recently eclipsed 13,000 points, which is a sentimental number for many investors. I don't hold much credence or confidence in round numbers like that, but it does show the confidence in the hearts of investors. I think some of this confidence is a bit of a self-fulfilling prophecy as investors continue to buy into a rising market. That is a bit troubling, as the fall could be harder and faster than the rise as the self-fulfilling prophecy comes full circle. We'll see.

Next week the DJIA could rise 200 points, it could fall 200 points or it could stay static. The point is that nobody knows. The quicker you realize this and ignore the noise, the faster you'll be better off for it. You're simply a cork floating in a giant sea. You do not have power to move the sea, but you do have the power to buy when you're at the bottom of a wave. Buy on the dips.

For me, I'll continue to find the best values that Mr. Market presents me. If I truly find none, then I'll hold my cash and wait for an opportunity to come to me. I don't chase stocks, but I also don't enjoy holding on to large amounts of cash. Cash is a terrible investment historically.

What about you? Are you a cork floating in the sea, buying on the dips?

Thanks for reading.

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