Is the bottom in?

It’s the question on the tip of every investor’s and trader’s lips this week.

The market has been rallying for the better part of a week.

The fed just planked down a large wad of cash that will allow many homeowners to soon lower their mortgage interest rates.

A lot of financial stocks have seemingly been rallying lately.

Some stocks are even continuing to move higher on not-such-great news about their company — and the market loves when it sees this type of rally.

So everyone is asking — is the bottom in?

And no one knows.

Not me.

Not your favorite business reporter.

Not your favorite guru investor.

Here’s why:

As I told you last week — before the so-called rally — I saw signs by the activity on my main board and the questions being asked that there was a whole slew of people — especially men in that 25 to 35 demographic — who were positively itching to jump in this market.

They have big visions of buying low and watching it rise to magnificent altitudes.

Most have never been through a volatile market — at least not with their own money in it.

So they watch Citi popping nicely this week — and they want in.

But those aren’t the traders I want here.

They’re the lazy style investors who don’t want to do their homework and prefer making their picks in the same cavalier attitude that a gambler picks a horse at the track because he likes its name.

They want to find someone else to make the picks for them.

I don’t like gamblers — I like investments based on research and facts.

So they see a pop and they jump in.

It never dawns on them that they are chasing a rally.

They’re too emotional to wait for a pullback.

In many cases, they’ll end up doing just the opposite of what their intent is to do — buying on the rally at the high price — only to see their stock pullback.

Who knows if the street liked the influx of cash that Citi got from the fed?

And who knows if the sudden surge in Citi has to do with institutions covering their shorts before the options close date?

It’s not my style of investing.

My style is to not get fixated on getting in at the lowest price. I want to sit back and watch how the market and my specific due diligence list stocks respond over a bit more time — especially after the earnings season.

I don’t need to pick the bottom — I’d rather wait for a stock to be moving on fundamentals.

In the meantime, I’ve added the XLF to my due diligence list.

Just remember the usual disclaimer: Don’t base any of your investment decisions on anything you read here. Do your own due diligence — or at least enough research to pick the right professional to do it for you.


There are no comments on this post.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: