Saturday, September 30, 2006

Bulls vs. Bears

Since I am relatively new to the market I do not have any experience with this particular portion of the economic cycle. I keep hearing and reading two arguments that both make sense to me. First, is the obvious fact that if there is a general slowdown in the economy there will be a corresponding slowdown in corporate earnings, thus lowering stocks prices. Now there are many arguments about how severe the slowdown will be, but generally I think everyone agrees that there will be a slowing of the economy. The other side of the argument is that the macroeconomic picture doesn't mean a damn thing to where the stock market is going. Basically, by worrying about the doom and gloom will prevent one from participating in large market moves to the upside.

What does a small, inexperienced investor like myself do? Right now, I'm not sure. I would feel a whole lot better if the small cap growth stocks would perk up. I think this is my major concern. Should I stay long with these small caps, which offer a huge upside, or do I shift my money into a large cap ETF like the DIA or SPY?

My strategy for now is to hold on to my long positions and keep a close eye on their behavior. This time I will make sure the stocks give clear sell signals before I sell.

From the world of sports, the Dodgers clintched a playoff spot today! I just hope Nomar gets healthy before the playoffs begin.

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