July 12, 2010
Last week US stocks had their best week in nearly a year, with the Dow Jones Industrial Average rising 511 points (5.3%). Economic news has been generally positive, the US Congress has managed to go another week without wrecking the economy, and investors were upbeat about the coming spate of corporate earnings reports. The latter starts today, with Alcoa poised to report after 4 pm.
There has been quite a bit of investor pessimism over the last few months as the market has drifted. Is the pessimism the cause of the drift, or an effect? Probably some of both. But it's important to note that to make money investing you've got to stick with it. A number of studies over the last 20 years have illustrated that if you try to time the market and end up missing just a few good days your return can be sharply reduced. (check out this chart from Putnam)
If your investments are of good quality, stick with them. You've got to stay in it to win it.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).