Important Lessons for Optimistic Rally Investors
This rally STINKS! Be a Pessimist!!! Before you shut me out....
A) I am nearly an All Star now!
B) I may be a Newbie still in the market.... Just over 1 year of experience now... But, I have grown quite smart over surviving 2008. Anyone that has survived 2008 deserves some Kudos here!
Ok.. Here's my advice to you as to why you MUST be a PESSIMIST!
I have in this rally already reversed ALL (that's right) ALL of last year's losses and then some....
But now is not the time to jump up and down... Call your Girlfriend and Buddies over to celebrate with Beer, Wine, and NCAA Basketball games....No!!!
Now is not the time to contact your local dealership for what the price is of a new 2009 Corvette.
Now is not the time to shop the Housing Market for a Million Dollar Home with 16 bedrooms and 8 baths, Gold Rallings, indoor Olympic Sized Swimming Pool and Jacuzzi + Hot Tub.
Cause we can LOSE everything you are gaining in your portfolio how quick?
This quick..... *blink* done! It's all gone! Too bad! So Sad!
Ya think 2008 was nasty? Wait till you find out what happens in 2113!!! ooooh boy!
So.... Be a Pessmist..... Trust me.... Even if this is somehow, bizzarely, a rally into a bull market that lasts all the way to your Retirement with absolutely not a single hitch because everything is just perfect all of a sudden.... You MUST be a pessimist!
Here are rules to follow for all you PESSIMISTS out there:
1) If you are as clueless as me about the Options Market.... Study it! I plan to buy some books this weekend.
Next week should be known as "PUTS WEEK."
2) Start Amassing Cash on the sidelines... Ya know something in your portfolio will eventually DIP down hard... and you want to have that CASH liquid and ready to scoop in some shares when it does.
3) Eyeballing for new stock to add to your portfolio? In this case... I live by a simple rule.. Look for P/E of 8 or less unless the catalyst justifies a higher P/E. But almost always I am eyeballing a P/E of 8.
Ya know what I was drooling like mad over this morning? (RCL)!!!! Check it out. Not too late to get in when it's at less than P/E of 4 before the start of this trading day.
4) The problem with these rallys is they absolutely SHOOT THE MOON. When the true value of the future economy justifies DOW 9,000.... Often times the Rally will SHOOT THE MOON to DOW 10,000+ before finally crashing down closer to where it should be.
Design and build your plan of attack.... Yes. I know.. We are all just nothing more than "BUY and HOLD" Motely Fool-ites.
That's fine... But it doesn't hurt to start hedging all of these gains when they have basically slammed into your Portfolio litterally overnight.
In less than 1 month.... Many people besides myself have basically earned so much cash that it would normally take 1 full year in a super Bull market to get. And we did it in 3 weeks???? 3 weeks???
Go ahead.. See the 3 ticker symbols? I bought them reallly really cheap in price before they skyrocketed.