What a Rally

Well, we've had some rally and judging from emails I'm getting a lot of you are making money which is brilliant.

I've been thinking about stock market cliches and whether they are right.

Sell in May and come back on St Ledgers Day was a bum steer this year. Shares rose consistently through the whole of this summer.

However there is one cliche that keeps coming into my mind that really does seem to work. And that's the one about buying on fear and selling on greed. I looked back at history and it is really true.

Pretty much every time if you'd bought at the highest point of fear and then held until the last person was buying you'd have made a fortune on the market.

I plunged in myself and bought a whole loads of shares in March when the world appeared to be caving in.

My buying at the worst point of fear has paid off in bucketloads for me.

Well, actually I started buying the moment I thought I realised banks like Barclays weren't going to suddenly go bust. And indeed Barclays is currently one of my big winners having bought at 87p. And though I'm up 4-5 times my entry I am still holding.

I think that's because I don't think we're at the highest point of greed/optimism just yet and that even if we get a quite likely pullback I don't think it'll be that big.

But certainly I'm looking for this point to take substantial profit. In particular I'm looking for the first cab driver to tell me he's filling his boots with shares as the best signal to get out.

The other good signal is newspaper stories proclaiming a new boom. Another excellent sell signal.

And of course a final good sell signal is when the advfn bulletin boards become full of self-proclaimed geniuses telling all and sundry how much money they're making and they're ready to buy their first Aston Martin.

When that happens it definitely is time to get out. Because the market always bites you just when you think you are king of the hill. So what can I say? Time to be very selective about any further buys!

If you're making money at the moment, well done but never forget profits are there for the taking sometimes and if in doubt, it can often be a good move to sell half of a good winner and run the rest.