Why You Should Ignore The Market In Late
August
The Dynamic Wealth Report
August 17, 2009
You Need To Ignore This Market
by Brian T Mikes, Editor
I’m sitting in a bar in New York. It’s the Bull & Bear at the
Waldorf-Astoria. The place just smells of money, lots of money. I’m
sipping a scotch while waiting for a client. Little did I know, tonight
I’d be learning an investment secret…
The place is immaculate. You can feel the history. The waiters and
barmen are sharply dressed in black and white uniforms. Service is
attentive, but not rushed. And the drinks are stiff. The dark wood
paneling gives the room an air of importance, and dimmed lighting sets
the stage.
This isn’t your ordinary bar. This place has history.
Billions worth of deals have been struck right in this very bar…
My dining companion this evening is a venture capitalist from Los
Angeles. I’m working on a deal to raise one of his alternative energy
companies $50 million.
He arrives in a flurry with his cell phone glued to his ear. It’s
nothing new. He’s always like this. Always talking about the next deal…
always closing new investors.
We settle in and after the first round of drinks, the atmosphere eases.
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I give him a quick update on the deal. After a spirited debate about
the next steps, our discussion turns to the market. I don’t want to miss
this opportunity to pick his brain. I start firing away question after
question about his business and his views on the market.
I figure somebody investing millions probably has an interesting thought
or two… but what he said really surprised me.
Honestly, I don’t even remember the question… It was probably about some
recent economic indicator. Something probably splashed across the front
page of the Wall Street Journal. The question I don’t remember… What I
do remember is his response.
“Forget it… It doesn’t mean anything.”
“What? What do you mean forget it?” I gasped.
“Forget it.” Then leaning in he said, “Look, some things matter. Some
things don’t. The key is knowing what to look at and ignoring the rest.”
He went on…
“I don’t make money on the deals I do… I make money on the deals I don’t
do. I look at hundreds of deals every week. If I spent hours on each and
everyone, I’d never find the great investment ideas. Find what’s
important and ignore the rest.”
What I took away from that meeting was nothing short of life changing.
My meeting took place a few years ago. But this little bit of wisdom
applies to us even today.
Right now, we find ourselves in the middle of August. It’s one of the
worst times to analyze the market. Why? Because everyone who matters is
on vacation right now. Seriously.
As a banker, I’d schedule meetings year round except for the last two
weeks of August. It was a sacred time. Nobody was in town. Not the money
managers, not the hedge fund managers, not the analysts, not the
bankers.
Everyone was on holiday. Some in the Hamptons… some in Europe.
The only people on Wall Street this time of year are junior traders and
junior bankers.
If you don’t believe me, just look at trading volumes. They always fall
off at the end of August. That’s why it’s important not to give too much
weight to market action right now.
I’m a big believer and follower of market action. That’s why I’m
studying the markets every day.
I’m still studying the markets. However, I’m not about to make any earth
shattering changes to my positions this week or next. I’m, not going to
discover a major change in market sentiment… not this time of the year.
Not the last two weeks of August.
We’ll discover the real direction of the market in early September. That’s when all the traders and money managers are back at their desks. That’s when the market shows its true colors.
• Gambling Industry (Up 31%)
The gambling industry has been on fire the last month. As a group, the
stocks have jumped over 31%. Renewed optimism the recession is ending is
freeing worried consumers and allowing them to take vacations. The
casinos are going to benefit in a big way.
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