Daily Money Minute

Fotolia_54867638_XS_7“Buy when the blood runs in the streets.” ~Nathan Rothschild

Stock market investors will be pleased with the gains they achieved in 2013. The consensus amongst market analysts suggests that 2014 could be a good year too. Only time will tell if they are right. However it’s worth remembering that markets are driven by fear and greed, as the great Warren Buffett once remarked. And of course greed will always trump fear. When stock markets gather pace, amateur investors often feel compelled to join the party, particularly now given that the return on cash deposits is so low. The danger is that they join the party at the wrong time and over-pay for the stocks they buy. The best time to buy is when everyone else is heading for the hills. That’s when you will find the real bargains. Had you invested in 2008 and held your nerve, you’d be sitting on some very good returns now. The best time to sell is when the ordinary man and woman in the street are starting to talk about the stock markets and the shares they’ve just bought. Personally I view the market through a contrarian lens and so far that approach has served me well. I look for value but it gets harder to find the more market sentiment lifts prices to levels which defy sound investment logic. Hopefully market performance in 2014 will be as promising as the analysts have suggested but never lose sight of sentiment and signs for when the market might turn.

© RJ Sutton and Mann Island Media Limited 2014. All Rights Reserved.

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