Thursday, January 20, 2011

Stock Market Stuck?

We're almost a month into 2011 but the stock market seems stuck in a rut. This is not an easy time for investors who are news junkies or obsessive-compulsive. My fund's year-to-date performance is around -2.4%.
It might be tempting to move to safer investments, or pull the money out altogether. Others may see it as an opportunity to invest at a lower price. Like I mentioned in a previous post, this is called "cost averaging". It's not the only available strategy, but it is one of the easiest and also the most boring. The idea is to invest a set amount at regular intervals regardless of NAVPS. That way more shares are bought when prices are lows and less shares are bought when prices are high.
After a few months it gets really boring. And when prices are down it's still boring and new investors may begin to doubt the strategy. After all, there are no guarantees that prices will go back up. Hmm... I don't know the answer to that one. Let's see what happens this year.

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