January stock market performance is correlated, we read, at 90% with that of the coming year: in other words, a 'positive' January 2014 predicts with a high degree of certainty a positive year. It is January 29, the bets are open but these last few days do not herald anything good. We will know on Friday and will then be able to decide whether to play the probabilities (sell if January is negative, buy if it is positive) or tell ourselves that it is a special year. I do not envy people who have to make these kinds of decisions... despite our skills, our brains and our experience, probabilities serve us better than our emotions. This decision is made all the more difficult because we are, in my opinion, typically in this unpleasant situation, in which one feels that the market players are observing each other and waiting from one second to the next for the music to stop. The analogy is apt, I believe: the goal of the game is to be able to sit down, but as we know, if you sit down before the music stops, you are also eliminated. The players move more and more slowly and closer to the chairs to ensure a place... ready to jump at the slightest pause in the melody. So, will the music stop? The bets are open!
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There are many of us value-oriented investors, particularly dividend-oriented investors, waiting for a correction so that we can return to the market with a clear conscience. There are always a few opportunities to be seized here and there, but they are increasingly rare and the risks are greater than in the past. The time when we could place orders almost with our eyes closed is long gone.
Yes, the music will stop, the question is when. The investor frenzy may last a few more months, or it may give way to panic. It's always the same. In the end, it's the conductors, like Goldman Sachs, who will decide in which direction they will make their musicians "dance". As for us, simple individual investors, if we are psychologically strong enough not to listen to the sirens of the market, we can play the score as we please and profit from the market's false notes.
In any case, I think (like some) that in 2014 we will be able to distinguish the good "stock picker" from the average investor who has had good results anyway.
results over the last 2 years regardless of what he invested in. 2014 is shaping up to be a volatile year; it will therefore allow us to separate the wheat from the chaff…
I just hope I'm a good grain 🙂
Good morning
What do you think about what is happening in the USA right now where people are returning to stock market values? Is it better to invest in the USA or in European markets at the moment?
Ludovic
For me, Europe or USA, both are overvalued.
In this situation, it is indeed difficult to decide how much cash to keep so that you can gorge yourself when the markets go down… The problem is that keeping cash also represents an opportunity. In short, this period is exciting! 🙂
So you have to combine the best of both worlds: invest less than your savings capacity when the markets are high, and more than your savings capacity when the markets are low. So, in the first phase, you still continue to invest a little bit, but while putting money aside for later, when you will have to invest more massively.
Good morning
As for the overvaluation of the USA, I'm not sure. Many people are currently investing in companies across the Atlantic and the Fed is backing up. There is still room to grow.
ludovic
It is precisely because there are a lot of people investing that it is not good. Too many buyers have returned to the market, and there will soon not be enough to fuel the frenzy... the bears will then arrive en masse to devour them YUM YUM 😉 And then the FED is gently withdrawing.
Despite the recent small correction, the market is still way too high: http://www.dividendes.ch/evaluation-du-marche/
Hello Jerome
Thank you for your analysis and sharing.
Meanwhile, Facebook is soaring
Ludovic
Regarding the bearish months of January, there have been 21 since 1950. 14 years ended in a negative year, the success rate is therefore 66%. Knowing that the last 2 times (2009 and 2010), the year ended positively. Statistically speaking, 2014 therefore has every chance of ending in decline.
One thing is for sure, with the increase in volatility at the start of the year, options traders have great opportunities to generate regular income: http://youtu.be/bpM1ft1m5c8
Almost all the lights are red 😉
I hope there will be some great opportunities again soon!
Insiders are disengaging quite a bit... I follow this on dataroma and finviz but we should be able to find a free graph somewhere (sentiment trader, but it's paid,,,)