“The Stock Market is booming” – are you still sitting on the sidelines, as the bulls charge by?
Today, as I write my weekly article, I have a smile on my face and a chart in front of me showing the ASX closing above 5,000 points – for the first time since April 2010. CBA’s massive profit figure today, no doubt helped, but the reality is, the money is pouring back into the market. Overlooking the water and marina, as our trading floor does, I am reminded of the old maxim, “A rising tide lifts all boats”
But does a rising tide lift ALL boats?
In reality, only those that are in the water – in other words, markets only reward action takers. Many out there are still on the sidelines – the past few weeks, following our articles, many dormant clients are returning to the fold, but what about you? Since the start of the year, all indications have pointed toward money flowing in, prices moving higher, cash returning practically zero on a post tax, post inflation basis.
The naysayers are of course still banging the drum that a correction is around the corner, China is slowing, Europe is a disaster zone, the US is teetering on the edge of the fiscal cliff and so on. However, against all of this, the market is continuing to go up and this brings us to the crux of what is trading and investing all about?
People often believe you need to be able to predict the future – which is simply not the case – the big danger with predictions is that your odds are 50/50 at best – think red/black or odd/even and these are not good odds. So no – nothing to do with predictions (and yes, my book Outrageous Predictions for 2013 book, is still in the iStore top 10, but we only wrote that for fun!)
Making money in the market is about responding to what is happening – applying your trading plan and getting it done. We have looked over recent weeks at trades on Telstra, Santos and Fortescue and with the way markets are moving, these opportunities are likely to continue.
Money in the bank
If we look at Santos – I wrote about this around a month ago, from a covered call perspective, we also ran a calendar spread for those clients who wanted a smaller dollar outlay, but who had a similar view on the stock.
The result – from a $5456 outlay, on 8th November – a gross profit of $1,122 or 20.56% in the bank on 15th February.
Maybe you are nervous about getting back on the horse
We understand, and often this can be one of the hardest decisions. Here’s why;
Unfortunately, this is why see high volume at the tops of the market. People sit and watch and wait, and watch and wait, until their fear of the market is overcome by the fear of missing out on making money – they have seen enough and reach their threshold. They then finally hop in, often right at the top, only to see things go the wrong way.
So why wait until the end of the game, before you get on?
All interesting stuff, I am sure, but here is the pointy question – how can we help you get your confidence up, to get started or to add to positions?
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