Monday, April 15, 2013

Material Stocks: Bottomed or Falling Knife?

China Q1 GDP Growth Eases to 7.7% Year-on-Year China Q1 GDP Growth Eases to 7.7% Year-on-Year is not good news for material stocks, which have risen and fallen with the China economy.   Many material stocks are at 52 week lows and have been declining since 2011.  Gold has just fallen into bear market territory for first time in 12 years.

Is it time to buy material stocks?  Probably not.

At this point, I expect that I will be able to buy at a lower price in the future.   First, the China (and global) economy is slowing.  Second, there will be a market correction soon.  Third, there will be rotation out of commodities as they continue to fall.

However, since a bottom never is announced, I will trickle in a small amount of funds during the decline.   So, I will take some losses buying on the way down, but I will limit the losses by limiting the funds that are invested.  When the market turns, I will then sell the lowest cost basis purchases into the rally.

For more on Strategies and Plans Ideas, check back every Monday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

No comments: