A real cliffhanger!

Yesterday, I caught up with a fellow remisier, who goes to the same Fitness First branch as I. He came in later than usual and looked a bit under the weather. I asked him whether he was held up by increased trades or orders. No, he said he had to talk to a client who kept pestering him for stock recommendations. The client felt that the market has dropped sufficiently and wanted to get into the market. My remisier friend felt otherwise. I can imagine the discussion must be quite stressful for my friend. I however commended him for being a professional. I know of remisiers who 'encourage' their clients to buy even after the market has topped or to sell even after the market has bottomed. This type of remisiers put paid to the expression "Ignorance is bliss". They in fact perpetuate the same ignorance in their clients and benefit from the clients' foolish action.

While the market is very likely to have made a top, there are sufficient buying support to keep the market at the current level. Whether this buying support can overturn what looks like & feels like the beginning of a bear market, we cannot be absolutely sure. For all we know, the market may surprise us & put in a strong recovery, despite all the negative signs and prognosis. Humbleness is a quality that all market players must have. So, if your friends or clients were to ask you, where are we in the market now? Use the following analogy to explain to them.

We had just fallen off a cliff but managed to somehow hang on to a branch, not far from the top. Can we climb back up? Are we fated to fall to our death?


(Source: cartoonstock.com)

Help may be on the way! Fed is about to start QE3! ECB and IMF may clobber a plan to save Europe. China may stop its inflation-busting monetary policies. But, bear in mind that even the best-laid plans can go astray.


(Source: cartoonstock.com)

As a precaution, take a parachute. It may weigh you down, but it will break your fall. Alternatively, you should travel slowly and inch forward carefully. So, if you feel very strongly about investing in the market, buy defensive stocks, such as utilities & consumer stable, and accumulate them slowly. Have a nice weekend!