Stock Investing: What To Do Now…
The Dynamic Wealth Report
December 1, 2011
by Justin Bennett, Editor
After a strong October, the US stock market is once again trapped in a
chokehold of European uncertainty. Sovereign debt worries in Europe’s
biggest economies have investors the world over pulling their hair out.
The tension is so thick you can cut it with a knife. Volatility in the
marketplace is exceptional- and it’s only intensifying.
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As you can see, the Dow dropped from 12,100 on November 15th (red arrow)
to 11,250 a few days later (green arrow)… a 6.6% shellacking. But then,
news of a global liquidity boost by central banks shot the Dow right
back over the 12,000 mark… where we sit now (blue arrow).
No doubt about it, a 1,500-point market swing in just 10 short trading
days makes for a challenging trading environment. The constant barrage
of European news headlines has the market dropping and popping by triple
digits nearly every day.
Unless you’re psychic, the markets are challenging to decipher on a
short-term basis.
That’s why it’s time to take a step back and look past all this
volatility.
That’s right… ignore it.
The markets are trendless, choppy, volatile, and exceptionally tough to
trade on a day-to-day basis. Even if you’re watching the markets
tick-for-tick, news headlines can change everything within minutes.
Even the most experienced market pros are having a tough time keeping up
with news from across the pond. Short-term traders are simply at the
mercy of market moving headlines.
Of course, there are various strategies to take advantage of all this
volatility. But unless you’re sitting in front of a computer watching
stocks all day, it’s a crapshoot at best.
That’s why it’s best to take a deep breath and go shopping…
Of course, I’m talking about value shopping for stocks.
Find stocks showing exceptional value.
Add small portions of these
stocks to your portfolio on any pullback in the market. And only
consider stocks you would want to own through thick and thin.
Here’s a solid example…
Kinder Morgan (KMI) is a Houston, Texas based oil and natural gas
pipeline company. They operate pipelines, which move oil and gas liquids
from the field to the marketplace.
Company insiders clearly like the stock at current prices.
In fact, Chairman and CEO Richard Kinder just loaded up on 19.7 million
shares of KMI on November 22nd. His pre-holiday stock-shopping spree is
valued at a cool
$500 million.
Insider buying is a great sign of value for a stock. There’s no doubt
Mr. Kinder knows his company inside and out. And if he’s buying here,
it’s a good sign he sees KMI trading higher in the future.
But here’s the best part…
KMI pays a 4% dividend. So if the markets take another leg down in
coming weeks, you’ll be paid to hold this stock while the markets fall.
Bottom line…
Whatever stock you pick, don’t load the boat on anything right now. If
things truly get out of hand in Europe (which is a growing possibility),
there’s no telling what can happen with global markets.
But if you’re not overinvested and have plenty of cash sitting on the
sidelines, you’ll be comfortable holding through whatever the market
throws at you.
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