Professional Pessimism is your friend
Despite these huge gains, professional traders are nervous and remain cautious. In my view, this is good news. The cautious tone means the professionals money managers are still reluctant to dive in, which essentially means there still are a lot of money left to be invested in stocks. Therefore, the current rally still has some legs. However, be careful to lock in your profit and don’t get too greedy. Have a goal in mind; when you hit that number, take the profit without regret. My prediction is the market will continue its bullish ways for the remainder of 2006. December is usually a good month for stocks.
When should one start to worry? Just as when you begin to hear about your neighbors and friends bragging about flipping homes, that’s a sure sign the market has reached saturation. When you begin to hear about your neighbor or the guy sitting next to you brag about his stock portfolio, that might be the time to bail as it would indicate the market has reached the ‘bubble’ status. Fortunately, despite the recent gains, I am still hearing the professional’s money managers cautioning their clients. Once you have hard time finding these “pessimistic professionals”; seriously consider selling and hold your money in cash until the storm passes.
