Are you one of the many investors waiting for the one of the following?
- The global economic recovery to be more certain
- There to be one more (at least) almighty crash
At either of these points, you'll then jump back into the market.... right?
But, what if neither of these events occur? What if the market doesn't crash and the recovery remains weak long term and the market just kind of keeps drifting up? What if this is, in fact, the new "normal"?
What if growth doesn't return to previous levels for years or even decades? Do you invest in something else? Like what, property or cash? They won't do you any good either in a low growth environment. Do you keep sitting on the sidelines while your cash is worn down by inflation and taxation? Sitting in cash is the worst possible solution - it's negative thinking. Oh, sure, it's safe, but so is staying in bed or not going outside. You won't get hit by a bus if you stay inside. Safe options are always good short term, but bad long term.
While the current stock market has had a great run since March, many investors who have been waiting for the two events I mentioned above are wondering what to do now. They probably feel they have missed the boat... and to a great extent they have. They completely misread the situation, but all is not lost.
There is still a huge amount of money to be made in this market. While my Trident Confidential Portfolio has made close to 110% this year so far, I honestly can't see why I won't keep up my long term average of around 90%pa in 2010. I know that's a bold statement, but negative thinking and nice safe options will never make you any money.
If, as I suspect, we are entering in to a new "normal" of lower and slower growth, due to the days of "debt fueled growth" being over (for the time being), then our old approach to the stock market no longer applies. We have to think differently. Buying stocks "blindly" on the basis "they used to be good" is not an "investment strategy", it's an "investment habit".
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