Tough Times
Just like our price run-up in the market was perhaps overdone, it looks like our downturn will also be overdone.
The markets are never rational and I have a feeling we still might drop quite a bit.
The fundamentals of our commodity bull market haven't changed one bit but the emotions have.
People are beginning to panic and they just want to get out of all their resource stock as soon as possible.
It looks like we might have another period something like October 2005 which was a scary time to be holding Oil & Gas stocks in particular.
However, the patient and cool investor who did not panic profited very well if he just stuck with his positions as all the stocks rebounded very well as soon as October was done.
The one positive thing however will be that when this correction is done, there will be substantial gains to be made by buying some great companies at bargain prices.
So make sure you have some cash ready to buy in when the correction finishes. I still don't know when that will be, but I will try to be using charts and following the media. When the media turns unbelievably bearish on the market, gold, commodities etc, that will be the perfect time to get in.
Then, like magic, we will begin to see stocks that have been pummelled slowly start to rise. Then all the people who sold out will be banging their heads against the walls and start pressing the "buy" buttons again.
Remember that the market goes up and down. But in a bull market the long term trend is up so make sure you are able to sell into strength and buy into weakness.