Is the mar­ket cor­rec­tion over?

The Sun Times (Owen Sound) - - OPINION - DO­RIAN SHORTT

With the hol­i­day sea­son over and tax sea­son on the hori­zon, lots of se­niors are turn­ing their at­ten­tion to their fi­nances and won­der­ing what is next in the world of in­vest­ments.

The mar­kets of the last half of last year were un­pre­dictably volatile and De­cem­ber was the worst year end month since the Great De­pres­sion. So it’s no sur­prise that folks are scratch­ing their heads and try­ing to fig­ure out what’s next. The year started out as wildly as last year fin­ished, but as I write this on Jan. 9, things seem to be set­tling into a less manic mood. But don’t be sur­prised if Mr. Mar­ket makes a liar of me be­fore you get a chance to read this.

If the worst of the crazy ups and downs are in­deed over, now is the time for brave in­vestors to dip their toes in the ocean of eq­uity in­vest­ments. Please note that I said dip your toes in, not dive in head first since the wa­ter could be shal­low and your head might hurt after­wards. Al­though the mar­kets of­fers a pretty good chance to pick up some quick gains, you need to be cau­tious in case more pain is on the way. In my opin­ion, there are many, many stocks avail­able at bar­gain base­ment prices. If a stock has dropped 30 per cent, but has done noth­ing to de­serve the drop such as bad news or a poor earn­ings re­sult, chances are it will re­visit those highs and more in the fu­ture. While a gen­eral trend down in the mar­ket can drive such stocks fur­ther down, even­tu­ally the big money boys will dive in and start buy­ing with both hands. The se­cret for small in­vestors is to start small and build po­si­tion slowly as op­por­tu­ni­ties arise.

The small in­vestors need to do a lit­tle re­search be­fore they buy a par­tic­u­lar stock, but most of the in­for­ma­tion you need is free and avail­able on the in­ter­net. Very large com­pa­nies that nor­mally don’t make large moves are good ones to take a close look at. Some­times a great op­por­tu­nity comes from a stock that sud­denly has a spike in vol­ume. If noth­ing bad is hap­pen­ing with the stock, the in­creased vol­ume means buy­ers are re­turn­ing and the price is very likely to go up. Of course my sug­ges­tions are meant for some­one who has at least a lit­tle ed­u­ca­tion on how the mar­kets work - this is not for be­gin­ners. How­ever, those new to this can spend a mod­est amount of time and money on line and get all the skills they need to get in­volved. One only needs to start with lit­tle po­si­tions and learn from ex­pe­ri­ence what works and what doesn’t. As al­ways, I rec­om­mend you arm your­self with solid in­for­ma­tion and ed­u­ca­tion when trad­ing stocks. Many a for­tune has been built us­ing strate­gies like this, so why not you?

Do­rian Shortt CFP has over 23 years of ex­pe­ri­ence as a fi­nan­cial plan­ner with a spe­cial in­ter­est in re­tire­ment and es­tate plan­ning [email protected]

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