In Good Times Trade the Future, In Bad Times Trade the Now
Trade The Time
In the investment community words like “greed” and “risk” are generously and freely tossed around when speaking of the enormous boom and bust of both the Dot-Com Era and the Current Crisis of ‘2008. Yet, what is also important to remember is that there is a third element involved which is “time horizon.”
In the late 1990’s the best performing stocks such as eBay and Amazon were built on an almost impossible scale of potential growth. They make predictions that suggest they can see years into the future. In retrospect, one of the winnigest strategies would have been to have bought and sold stocks whose yearly projections for the future were the greatest. In good times trade the future.
Stocks now considered good buys are those that will produce consistent returns. They offer finite growth. Examples would be utility stocks and consumer good companies.Yet, another way to invest is to trade what is happening now. One recent example appears to be regional banks. Goldman Sachs recently received a bank charter and Citigroup is said to be still considering an acquistion in the light of Wells Fargo acquiring Wachovia. It is very possible within the next six months there will be several bank mergers in the Northeast as it holds the greatest concentration of the U.S. population as this article illustrates.
