Growing Rich - Arabictrader.com

GROWING RICH WITH GROWTH STOCKS
term. This ‘pendulum pattern’ can be explained, too simply perhaps,
as initial enthusiasm for a new president, a subsequent period of disillusionment,
followed by a rally from the previous low, either because
a popular president seems likely to be returned to office for another
four years, or an unpopular one is in the process of being turned out
to do other things.”
One final and graphic form of proof that market timing doesn’t
work can be seen by looking at “The Investment Decision-Making
Process” chart on the following page. It shows how investor sentiment
is often a contrary indicator. When the market is going up, and
everything looks great, this can cloud your vision about what’s really
ahead. Likewise, when prices are down, and the market seems dreary,
it may be just the time to start investing more money. You never
know. That’s why second-guessing the direction of the market almost
always fails. “Market timers are slow to get in and never the first to
get out,” Stovall notes. “They never buy at the bottom, because they
wait for signs of strength before making a commitment. Then they
won’t sell out until they see a serious break point.” Stovall got this
chart in 1970 from the late Ken Ward, a senior technical analyst he
hired when he was at Reynolds Securities. “It is a good reminder of
human fallibility. The market will do what the market will do,” Stovall
adds.
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