Oct 30

Do It Yourself Asset Management 7

8. How you are making money

There is a saying, “You make your money when you buy. Not when you sell.”

This means that if you buy something cheap enough, you can’t fail to make money later when it appreciates and you decide to sell it.

Another idea is this: “It’s not money until you sell it. Until then, it is only marks on paper.” This is particularly true of stocks.

9. The Stock market, if and when to get out

If the market starts to drop, you have 2 basic choices. Get out or ride it out.

Remember that if you decide to get out, sell orders are not executed until the end of the trading day. So if you see a trend you don’t like at 8:05 AM EST and give the “sell” order.

During the day your stocks drop, say, 550 points. You will eat that entire loss because your sell order will be executed at the end of the day at the price of the stock at that time. Not at 8:05 AM EST at the price it was when you first gave the sell order.

A lot depends upon world news, and how you think the market will do over a period of weeks or months rather than on a single day’s performance.

If you are pretty sure there is going to be a long down trend, it is probably best to get out to stop the bleeding and then get back in when it bottoms out.

At the moment, the market is so volatile, it is probably best to dabble elsewhere. And all pointers say that things will not improve for some time to come.

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