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See-Sawing Stocks Require Iron Gut

It’s a wonder that I haven’t sold all of my stock holdings that are in my husbands self directed 401k plan and my self directed 401k plan. You see, we believe that we can pick stocks better than mutual funds, and we don’t like the fact that mutual funds are not a totally transparent investment vehicle – ie, they don’t tell you exactly what stocks they invest in, and you have to pay fees, etc. on them as well.

I feel that I know enough about stock basics to make informed decisions and “calculated risks” to buy stocks that I believe will hold up well over time, and balance out all the losses they are almost certain to suffer in this awful, see-saw economy. So, we ditched any mutual funds we had, got into cash (Thank God we did this before the terrible stock market crash in 2008), and decided to stay in cash for a while and then bought stocks at what we felt were fair prices.

Well, needless to say, many of the stocks we bought, although they are solid blue chips with good dividend payouts and great performance futures, have gone up and down, and up and down and …..you get the picture.

If you are one of those people who pulls out whenever a stock goes below what you bought it at, then you really probably are not meant to own stocks. Especially in a rocky economy such as this one. It’s gut wrenching to watch your investment lose value, I’ll admit that, but as long as you have faith that you bought a solid investment, then it’s really not that hard to let it ride over the long haul and make bucks on it in the future.

I’ll admit, I’ve had itchy fingers before when I see a stock I bought really take a hit, but I know that how finicky investors are right now, and how itchy THEIR trigger fingers are, I just have to wait out this horrid market volatility and hope for smoother sailing in the next few years. But I’m intelligent enough to know that it’s going to be a few years yet until everything stabilizes and stocks enjoy what is called a “secular bull market”.

Right now, the volatility is too great, and the sentiment is too unstable. Every day stocks seesaw up and down and the slightest bit of economic data can send stocks soaring or flopping. There is a lot of emotion going on out there right now, and that is what the stock market is built on – emotion.

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