Don't Just Do Something. Sit There!
Amazon.com (AMZN) from 1998 until present:
The bottom line: Most investors do not have the tools to play this bottom-guessing game. They lack the ability to wait for lows, and they lack the skill set to see the bottom when it's there. Too few employ stop losses or risk management. Worst of all, even when they do, they lack the discipline to follow their own rules.
So you ask: Is it safe yet?Unless you know -- and can avoid the dentists drill -- waiting for a major downtrend to be broken is the best way to preserve capital and redeploy cash intelligently. One of the key differences between individual investors and institutions is their respective job descriptions. Mutual funds, pension plans, hedge funds get paid to take extraordinary risks in order to improve their returns. Individuals, on the other hand, do not... Might today be the bottom? My best guess is that we are getting nearer a tradeable low -- the oversold point where a rally can run a few days to a few weeks. But my instinct is that we are nowhere near the 2008/2009 recession bottom. But why guess? Why not wait until the downtrend is decisively broken? The advantages of nailing a bottom precisely right for the individual are quite minor, especially relative to the disadvantages of being too early and losing precious capital.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV