Saturday, 8 October 2011

It's all on the Timing

As markets continue to be nervous and downgrades of both banks and countries sweep across Europe you might be thinking I'd be changing my mind regarding my positive medium / long term outlook. This goes to show why timing is so difficult and why a short term strategy can fail.

The reality is that it's very difficult to pick the bottom and top of markets. Many industry experts were calling the top of the UK property market as early as 2005 / 2006 but it rallied well beyond then. However if you take a longer term view, short term fluctuations are only loses on paper, and might even be opportunities to invest further.

My strategy of buying what I believe to be good value stocks as I wrote about a few weeks ago is continuing and my outlook remains the same. Anything short of total Eurozone meltdown is not a problem and non of Europe's leaders can afford to let that happen. Short term traders trading of margin may have gotten their fingers burnt with this volatility, especially if they've been trying to call tops and bottoms. Taking a longer term view actually gives you a much wider window of timing which even the most respected traders and hedge fund managers rely on.

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