Tuesday, July 29, 2014 04:56pm
North Adams, MA now: 68 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
SIGN IN | REGISTER NOW   

Home About Archives RSS Feed
@themarket: Don't Buy the Dips
By Bill Schmick On: 04:11AM / Saturday May 17, 2014
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0

The S&P 500 Index hit 1,900 this week. The Dow Jones Industrial and Transportation averages also reached new historical highs but the euphoria lasted about a minute and a half.

That's about as long as it took for traders to sell into the move. Not good.

The market gave the bulls all the excuses in the world to man-up and push the markets higher, as they backed and filled for two days, then the bears took over. Thursday was a blood bath and sellers added to the damage again on Friday. Not good.

Last year, if you recall, all I recommended readers to do is "buy the dips" whenever the stock market declined. Obviously, from this headline, I am recommending just the opposite today, especially in the so-called momentum stocks. Momentum, small-cap and mid-cap stocks continue to lead the markets lower. As it should be, since they have led the market up over the first three months of the year. Don't think that they have bottomed. In fact, sell any bounces in these names.

"I can't sell them now, they are down too much," retorted Chris, a friend and client, as we walked our dogs by the lake this morning.

It is an understandable attitude. The hardest thing to do is sell when you are underwater pricewise and down 40-50 percent from the highs. That little devil on your shoulder is whispering that if you just hold on you will recoup all your losses and then some. That may happen but in my experience too often the opposite occurs. Instead, you will end up watching those stocks drop another 30 percent before you finally sell in a fit of emotional disgust.

Another thing to remember is that many of these momentum names that hit astronomical prices had no business reaching that price in the first place. Expecting them to regain their former luster anytime soon is about on par with hitting the lottery next week. To me, it is far better to take losses now, sit on the sidelines in cash and wait until there truly signs of a bottom before buying back in.

If, on the other hand, you managed to avoid getting entangled in these high flyers, sit tight. You have raised the recommended cash. Sure, you will take some paper losses on the rest of your portfolio, but that will be a temporary condition. By the end of the year you should recoup those losses.

It is too hard to tell whether this week was the start of my forecasted 10-15 percent correction.

However, we are entering the third week in May (sell in May and go away) so whatever you do - don't buy the dip. If the markets follow the behaviorial pattern of the last several weeks, expect the market to bounce for a few days next week.

We have now hit my target of 1,900 on the S&P 500 Index. I actually expected a little further upside (20-30 points or so) once we hit that level but I'll settle for what I can get. And who knows, traders might try once again to break that 1,900 ceiling level and propel markets and emotions to higher highs. I don't care.

It feels to me like the markets are rolling over here. If that process has begun, I wish it would be a short, sharp and therefore less painful ordeal than a drawn-out affair that lasts through the summer. However, markets, as I have often said, will do what is most inconvenient for the greatest number of people.

Plan accordingly.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.



0 Comments
     
News Headlines
Melito Family Reunion in North Adams
Three Berkshires Men Fighting Fires in Northwest
Pittsfield Councilors Favor Opposition to Gas Pipeline
North Adams Housing Agency Reaching Asset Deal With City
Williamstown Town, Fire Discuss Coordinating Annual Meetings
Wilber Off to Strong Start at YMCA Nationals
Berkshire Force Set to Host Softball World Series
Mount Greylock Alums Reunite to Play at Reunion
La Festa Baseball Renews Boston-North Adams Competition
Pittsfield School Building Panel Opts for New High School
Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (140)
Independent Investor (190)
Archives:
July 2014 (2)
June 2014 (6)
May 2014 (9)
April 2014 (8)
March 2014 (6)
February 2014 (6)
January 2014 (7)
December 2013 (8)
November 2013 (7)
October 2013 (6)
September 2013 (6)
August 2013 (8)
Tags:
Bailout Election Stocks Crisis Europe Fed Europe Japan Rally Federal Reserve Housing Commodities Selloff Interest Rates Taxes Euro Congress Debt Stock Market Banks Deficit Jobs Pullback Stimulus Metals Fiscal Cliff Greece Currency Oil Recession Markets Energy Retirement Debt Ceiling Economy
Popular Entries:
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Don't Fight the Fed
The Independent Investor: Does Cash Mean Currencies?
@theMarket: QE II Supports the Markets
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
The Independent Investor: How Much Is Too Much to Spend in Retirement?
The Independent Investor: The Fed Turns Off the Spigot
The Independent Investor: Should You Pay Off Mortgage Before Retiring?
The Independent Investor: Retirement should be a part-time job
The Independent Investor: Unhappily Ever After
@theMarket: June Swoon
@theMarket: Europe Is a Good Bet
The Independent Investor: A Road to the Future
The Independent Investor: Holy Cow
@theMarket: Flirting With Record Highs Again


View All
Pittsfield Ethnic Fair 2014
North Street in Pittsfield had a double-dose of block...
LaFesta Baseball 2014
The LaFesta Baseball Exchange, celebrating 24 years, pits...
Adams Polish Picnic 2014
Adams residents enjoyed traditional Polish food and music...
Mingo's Sports Bar & Grill...
Over 50 cars packed into the Mingo's Sports Bar & Grill...
BYP Networking at Naumkeag
The Berkshire Young Professionals met at the historic...
Pittsfield Shakespeare...
Pittsfield's Shakespeare in the Park free performances at...
Lanesborough Kids Fire Camp...
Lanesborough Fire Department held its annual Kids Fire Camp...
Lanesborough Fire Drill
The Lanesborough Fire Department trains on basement fires...
Pittsfield Polish Picnic
Crowds lined up for golabki and kapusta at the annual...
North Adams Kids Emergency...
The North Adams 21st Century Community Learning Center...
Gather-in Festival 2014
The 42nd annual Gather-In festival was held at Pitt Park in...
BFAIR Mini-Golf Fundraiser
Berkshire Family and Individual Resources held its annual...
Lanesborough Seeds of Harmony...
Bradly Farm in...
Hinsdale Block Party
The Hinsdale Fire Department hosted its annual block party...
Arrowhead Country Craft Fair
Arrowhead, Herman Melville's home in Pittsfield, is hosting...
Pittsfield 3rd Thursday July...
Shakespeare was the theme for this month's 3rd Thursday...
Pittsfield Ethnic Fair 2014
North Street in Pittsfield had a double-dose of block...
LaFesta Baseball 2014
The LaFesta Baseball Exchange, celebrating 24 years, pits...
Adams Polish Picnic 2014
Adams residents enjoyed traditional Polish food and music...
Mingo's Sports Bar & Grill...
Over 50 cars packed into the Mingo's Sports Bar & Grill...
BYP Networking at Naumkeag
The Berkshire Young Professionals met at the historic...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings
Advertise | Recommend This Page | Help Contact Us | Privacy Policy| User Agreement
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2000 Boxcar Media LLC - All rights reserved