Saturday, August 11, 2007

Stock market in the summer

With all of the press coverage of the turmoil in the financial markets, nobody is pointing out the obvious: it is August, the middle of the Summer, when most sane people are at least mentally if not physically off on vacation, at the beach, out on the golf course, lying around the pool, or anywhere but focused on the financial markets. Sure, there are many people still toiling away in the markets, but even they are not at the top of their investment game.

There is an old saying which describes any social environment, including the financial markets:

When the tiger is away, the monkeys rule the jungle.

Clearly, the "tigers" have hung out a "Gone Fishing" sign for the Summer and the "monkeys" are fully in "control."

Nothing good ever comes from having the monkeys in charge. Sure, they can in fact run the markets up and down and quite dramatically to boot, but ultimately not in anything resembling an orderly manner.

Not to worry, within a month the tigers will be back in town, tanned and rested, and then the monkeys will go back to hiding in the trees, where they belong.

As far as I can tell, the economy is still in reasonably decent shape, so there is good reason to believe that quality stocks will bounce back in short order. Whether the "monkeys" will engineer a market recover or whether we have to wait for the tigers, either way the current weakness is unlikely to persist for very long.

I don't advocate trying to time the market, but prices do look a lot more reasonable than in early July, so "buying the dip" is not an unreasonable temptation. My biweekly Roth 401k stock purchase will occur on Wednesday and my monthly ShareBuilder stock purchase plan will buy on Tuesday. I'm going to be a net buyer of stocks for at least another five years, so every dip is a good deal for me. I personally won't mind if the market goes lower.

-- Jack Krupansky


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