Good Rule: Investing In Stocks, Tune Out The Noise
$KO
US Federal Reserve Chairwoman Janet Yellen opined last month that stock prices are “quite high,” but given the weak track record of Fed officials when it comes to foreseeing market moves, do not expect stocks to drop, say one Fed observer.
Note: the S&P 500 broke Key support Monday at its 100-Day MA (2084) finishing -13.55 at 2079.58, off from its May high at 2135 just prior to Ms. Yellen’s “quite high” proclamation.
Some of you may recall when former Fed Chairman Alan Greenspan said in December 1996 that the stock market may have been suffering from “irrational exuberance.” But stocks kept rising for another 3 years+.
Stocks go up and down, but our ability to forecast market movements with any short-term accuracy is very difficult.
So, instead of basing your investment decisions on market forecasts, participants are better off building a diversified portfolio that matches their long-term goals that you can stick with through the ups and downs.
Legendary fund manager Peter Lynch, 71 anni, has received great acclaim over the years for recommending that investors who enjoy using certain products and see others enjoying those products should consider buying the stocks of the companies that make them. The idea is folksy and simple, and a bad idea.
In this kind of market wrong to assume that because a company makes money selling sugar sweetened soft drinks, and because it’s selling lots of it, that it’s a great investment, case in point Coca Cola (NYSE:KO).
Mr. Lynch did say that the idea is just as a starting point.
So, when you decide to participate in the stock market you should thoroughly research a company’s finances and make certain it on a solid path to profitable growth before buying the company shares with the long tern view in mind.
It is your money, its your responsibility.
Stay tuned…
HeffX-LTN
Paul Ebeling
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