Investors Feeling Flat
INVESTORS FEELING FLAT
It's been a turbulent time to say the least! I've been getting quite a lot of feedback from investors who say they have sold up for the moment and "gone flat" - i.e. gone totally into cash.
I think this idea has some merit. I remember a while back I spoke to a spread firm market maker who told me some of the biggest winners do just that - sell up for a couple of weeks and then come back into the market. "It's a bit like refreshing a jaded palate," he explained.
I've not gone that far myself but I have reduced my market exposure by 70 percent and cashed in a lot of profit built up over the last year. However I have held onto core holdings such as Carphone Warehouse, CSR, and Marchpole. And I've delved into a bit of shorting (betting on a share to go down) and had a fair bit of success with Admiral.
I think it is reasonably sensible to reduce exposure, unless of course you are a day trader, and how they must be revelling in these volatile conditions! There is money to be made for those that are experienced, quick-fire traders. But, like most, I am not one of those medium-term investors; and - like most - I'm waiting with cash on the sidelines hoping to buy shares at a real bargain.
I think it is worth being patient for now: let the market swing back and forth and go back in when it feels safer. It might be dangerous to go right back in after the falls, in case one gets caught by the "dead cat bounce". That means buying in when shares start to rise again but getting the timing wrong to see them collapse again.
Caution must be the keyword for now!
Of course, longer term investors who are holding shares in strong companies will probably be able to shrug their shoulders and ride it out. They feel investing is a long-term game and are happy to hold; that argument has merit too.
It really all depends on what sort of trader/investor you are and we all have different styles.
For now I am happy to have banked some recent powerful gains and get my cash ready to buy back in when I feel the time is right. That could be next week, it could be September, or it could be next year.
Rather than try and second guess what is going to happen, I would rather let the market guide me. I wish all investors all the best of luck in dealing with the current difficult conditions.