Are You Being a Neurotic Investor?

By: Marty Chenard | Wed, Sep 28, 2011
Print Email

Be clear, plan your investment strategy, and follow your plan. A very large number of investors have one portfolio but frustrate themselves with trying to follow two different trading time frames at the same time.

What do we mean by this? Many investors (especially pre-retirement or retired) define themselves as longer term and/or conservative investors. At the same time, they watch very short term time frames (daily) and frustrate themselves when a single day seems to move in opposition to their main course of action.

When an up day occurs for some who are sitting in cash, they often tell themselves "I should have ... I could have ... I missed today's move, I'm upset, I'm mad at myself, etc." They literally beat themselves up when a short term move is not in accordance with their longer term stance at any given moment. This creates semi-neurotic mixed emotions, along with a touchy trigger finger which is often linked with such emotional reactions.

You can't be both ... a longer term, conservative investor and a "Day Trader" at the same time with one portfolio.

Pick one time period and don't jump back and forth. If you need to satisfy a shorter term, mental need due to a type A personality, then take a small percentage of your longer term funds (maybe 5% or less) and use it to play short term moves if that will calm your mind.

For the main portion of your funds, pick a sensible course based on your age, assets, retirement needs, risk tolerance, etc. and "stay the course" ... have a plan and stay with the plan.


What the market has REALLY done during the past 2 Months...

Two months of market movement ... In spite of what might have seemed like a good day yesterday, this two month chart of the NYA Index shows how the market went down in August, and even with yesterday's movement ... the market was down for the month of September as well. Longer term investor and/or conservative investors should NOT have lamented yesterday if they were in cash during that time.

See the next chart ...

NYA Index (NYSE)

The micro view perception ... A micro view perception is when someone looks at a small piece of something and is convinced it tells "the story" about a longer period of time.

Sometimes, longer term investors get "all upset" if their perception is that they missed a "good day" while they were in cash. That happened to a lot of investors yesterday who had multiple time frame trading desires. They defined themselves as conservative investors and wanted to be Day Traders at the very same time.

Let's look at the facts: The chart above, even with yesterday's action showed that the NYA Index has moved down for two months ... Why would a longer term, conservative investor be upset because he hadn't been long before yesterday's market action? By being in cash during the past two months, it allowed him to avoid losses and emotional turmoil. And yet ... that very same person may have put himself/herself under emotional turmoil yesterday because the market was up over 300 points on the DOW at one point during the day yesterday?

Take a look at the matrix-chart below ... what do you see? In spite of what might have seemed like a good day yesterday, this matrix shows that the market did move up 325 points on the DOW at one point during the day, but only temporarily. It ended up closing up 146 points for the day ... which was still down for the month of September.

Comments: You can't be both ... a longer term, conservative investor and a Day Trader" at the same time with one portfolio. Pick one time period and don't jump back and forth. If you need to satisfy a shorter term, mental need due to a type A personality, then take a small percentage of your longer term funds (maybe 5% or less) and use it to play short term moves if that will calm your mind. For the main portion of your funds, pick a sensible course based on your age, assets, retirement needs, risk tolerance, etc. and "stay the course" ... have a plan and stay with the plan.

Chart- Monday Tuesday moves

 


 

Marty Chenard

Author: Marty Chenard

Marty Chenard
StockTiming.com
Asheville, NC 28805
Tel: 828-296-1200

Marty Chenard is an Advanced Stock Market Technical Analyst that has developed his own proprietary analytical tools and stock market models. As a result, he was out of the market two weeks before the 1987 Crash in the most recent Bear Market he faxed his Members in March 2000 telling them all to SELL. He is an advanced technical analyst and not an investment advisor, nor a securities broker.

StockTiming.com is dedicated to Stock Market Investors who want the best information on stock charts, stock market trends, stock market timing and technical analysis.

Be My Guest and Take Advantage of Our Free Membership ... Get a Free Membership to StockTiming.com ... Youll receive important daily messages before the market opens and direct links to todays important web pages. Information and messages that are often not posted on our website. There is no obligation or expectation on our part ... it is just our way of proving our accuracy and timing expertise to you. Please click here for your Free Membership.

Copyright © 2006-2014 Marty Chenard

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

SEARCH





TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/