Saturday, January 13, 2018

Convincing Myself to Buy More Stocks

At the end of 2017, I posted that I would add funds if the market went up or if the market went down.  Well, the market went up the eight out of the nine first trading days of the year.   I didn't expect that.   I was planning on a decline, which would allow me to add funds at a lower cost basis. (For reference, I did buy some on the down day.)  Now, I will need to buy at higher prices, with the fear that the market will fall right after I buy.

After spending the last week considering my options, I have convinced myself to add funds systematically by purchasing on the dip with winning stocks and buying good stocks in beaten down sectors to mitigate the downside risk.  However, I will wait for a correction before adding significantly more funds.

Despite many arguments for the market being too high and the bull market being too long, below are my reasons that I believe the stock market will continue to rise:
  • The stock market advance indicates approval of the government's actions over the past year.  The sentiment is the economy will improve, businesses will grow, and 
  • Trump will continue to drive his pro-business, anti-regulation, and America first agenda.  wall Street and business are responding well in this environment.
Of course, interest rates could rise sharply, which would cause stocks to decline.

Finally, an Wall Street adage is " A bull market climbs a wall of worry."   And there is a lot of worry right now.

For more on Reflections and Musings, check back Saturdays for a new segment.

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

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