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Friday, March 23, 2018

#WallStreet Under Pressure - What To Do Now?

The market is difficult - what should I do?

For the short- and medium-term active investor I could recommend:

Personally, I'm strong on cash, barely holding a position. And that for weeks. In such a market phase I observe more than to trade. Watching is a must because the markets are not calling you or me and telling us that a new buy signal is now emerging. This usually comes suddenly, seemingly out of nothing.
  1. The trader massively reduces the risk. He deals with small to very small capital investment per trade (based on his account size). Or not.
  2. The trader accepts that the market is always right. That as a trader he can only probe probabilities for certain trend movements. The trade reflects on itself and does everything to avoid overestimating itself.
  3. The trader avoids overtrading. He constantly avoids buying or selling signals and trades and running after the market, which moves  like a rabbit, especially in troubled market phases. Ever seen a hawk and an eagle that is constantly bouncing off the sky to hunt prey? No! For the longest time, eagles or buzzards circle high in the sky and merely observe the scenery. They only come down when there is a real chance of catching the loot.
If you hold cash, you will not lose money!

Nevertheless here a tip:

Have a closer look on Bank of America (BAC)

While US banks have been able to leave the Valley of Tears for quite some time by announcing the turnaround in interest rates, some banks have come off significantly worse. Bank of America shares posted the best return over their biggest counterparts over the past six months. In contrast, Goldman Sachs and Citigroup changed insignificantly despite the US rally during this period.