Standing on the Sidelines, A Investor’s Dilemma
Posted by Blain Reinkensmeyer
October 25, 2007 at 11:41 am
With the markets moving so sporadically lately I have found myself thinking about whether or not it is better to be sidelined in 100% cash or fully involved in the market chaos.
The trader’s psychology is critical in times like these because if you are easily influenced by the random price spikes and declines you may find yourself making decisions you wouldn’t normally make. This means buying into stocks that show temporary strength or selling positions you feel have lost their edge.
Being a bench warmer has its pros and cons, but when it comes to the stock market you are playing a game with your actual financial future.
By being involved in the game you have exposure to all of its elements which in turn makes you a better all around player. On the contrary sitting on the sidelines allows you to rest, think, and strategize your next move.
Are you an investment bench warmer right now? If you are, then why? If you are still invested and actively trading in the markets right now, do you think it is worth the added risk?
There are many ways to combat stress in the stock market, and right now it seems every time you blink the market has found a new direction. For the average trader this may be a living hell of emotions and tense moments, while the seasoned veteran may think its the best time to trade. What is your investor’s dilemma?
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I have a trailing stop loss set on all of my stocks right now at 5%. The market has been good enough to me this year that even if they all trigger, it’s one of my best years ever. If they do trigger. I’m not sure I’ll be able to jump back in right now, too much risk. LULU triggered today, good profit.
Where do you put your money when it’s on the sidelines?
Nice play with LULU, interesting to see a yoga inspired retailer worth over $3 billion. My money on the sidelines either sits in cash or high yield savings accounts. Not enough experience with bonds and the like to invest there when the market is slacking.