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Is there anything in 2010 that is slower than it was in 1965 when we were kids (some of us anyway)? Planes are faster, food is faster and news is faster - maybe, the only thing slower is a major league baseball game between the Sox and Yankees!
Why then should trading and market movements be slower - technology, news distribution and frequent traders have made markets more volatile and the last week or so has been evidence of that. Too frequently, we get caught up in the fad/crisis du jour. Greece, Times Square bombings, Britain elections and deflation or inflation (or some other type of -flation) are all proof of that. Some of these are even crises of the month!
Investors (especially smaller ones) can’t turn on a dime nor should they want to do so. Inter-day mistakes triggerred by abnormal market action can be costly. Certainly, we aren’t saying buy and NEVER sell but we do believe that investors time horizons should be measure in months and years and not ticks higher and lower.
There are a number of factors supporting this market - improving job market, low inflation and a lack of attractive investment alternatives to name a few. When the brouhaha that is the business media dies down this will be what matters. The headwind that is “sovereign” debt will eventually give way to higher stock prices in the US but lower may be the next move of this market. Stay invested and stay diversified in these turbulent times.