Money Magnets

I am a Money Magnet! We are Money Magnets!

The global stock markets have been very volatile these days and certainly it's not the time to play around and risk your hard earned money if you don't know what you're doing.  While one may consider this as "extraordinary times," it's still just one of those crises that we have to face and surmount.  Like what we wrote in our previous post, "Welcome to Crisis", what's more important is to know how to survive and to thrive in such situations.  Every crisis is an opportunity for us to grow to our full potential and in every crisis, there's an opportunity waiting to be discovered.  While the global markets may be in turmoil, it doesn't mean that we can't have a little fun in our continuous pursuit of mastering the skills necessary to thrive in the stock market.  Recently, we've encountered some few interesting ideas about the stock market which were related to songs that we know by heart.  Hope this helps us remember a few points about investing and trading in stocks.

1. "It's just emotions taking me over." Bee Gees

Yesterday a US-based stock broker was quoted in saying that he thinks the current US Stock market is a "Bee Gees Market" because he believes it's just emotions taking stock traders over.  This is a good tip to remember for short-term traders.  When you're trading the stock market, you're not actually trading the stock itself but more so trading the emotions of the other traders.  Supply and demand in the short term is largely influenced by how other traders perceive where the market is going.  If you want to be successful in short-term trading, you might want to heed Jesse Livermore's advice and take emotions out of your trading.  Create a trading plan and follow your plan all the way.



2. "Say a Little Prayer"

For those more inclined to just buy and hold their stock positions, don't just buy and then say a little prayer afterwards hoping that what you bought will increase in value.  Make sure to do your homework first and look at companies with good fundamentals before you choose which stocks to put your money in.  Warren Buffet, one of the world's successful investors, uses this strategy.  With this approach, he doesn't have to monitor the stock prices everyday.  He's not that concerned with daily price movements because he knows that eventually the company will earn and with these earnings, the stock's price will increase without a doubt.

3. "Yesterday Once More"

This song will have to be the theme of stock traders who solely rely on Technical indicators.  By looking at a stock's price chart, certain trends and patterns can be observed.  And when these patterns repeat, it's yesterday once more.

While this approach has its advantages, we believe that it would be wiser if a trader combines both technical and fundamental analysis, as prescribed by William J. O'Neil in his book "How to Make Money in Stocks", in coming up with a winning portfolio.

Keep on attracting wealth Money Magnets!  Happy investing to all!

For more music-inspired learnings about the stock market, read Efren Cruz's article Music-inspired approach to Stock Investing here.