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Buy Stock Market - Right Time To Buy Stock Market?

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It has been proven time and time again that there is no better place to make money than the stock market. Don’t get your hopes up too fast, though. It’s not as easy as it sounds. There are many keys to buying and selling in the stock market, and while many people are already aware of these imperative steps, they have a tendency to disregard them because of emotion. The stock market moves in mysterious ways. What happens in a day, week, month, or even several years, won’t always reflect what is actually happening in the economy. Many people say that the stock market trades more on perception than reality. This might be the case in the short term, which is what traders pay attention to, but if you want to make money in the stock market, you need to think about the overall economic environment.

Most traders lose money. Yes, you read that correctly. They lose money. This is due to the reason stated above – emotion. There are many short-term traders out there who do make money as well. These are the traders that know when to buy and sell stocks based on technical analysis. There is much debate over the effectiveness of TA (technical analysis), but if everyone says that the current S & P resistance is 1100 based on charts, then they all must be coming up with the same readings. This, in turn, leads a realistic scenario. It becomes a self-fulfilling prophecy. At the current time, the S & P will meet strong resistance at 1100 and strong support at 860. This is regardless of earnings or economic readings like GDP, home construction, and consumer confidence. These factors will still drive the market, but once those major numbers are hit, the herd will react.

Remember, buying and selling stocks is a tricky game. For instance, if a major event takes place or very surprising numbers come in, S & P 680 might not hold. This would shock traders and lead to an all-out exodus of the stock market. This is why trading can be risky. This is also why you need to place trailing stops on all your trades. By having trailing stops on your positions, you will be able to minimize your losses and maximize your gains. This will allow you to buy and sell stock with confidence.

In most cases, it’s a good idea to own stocks for the long term, but based on the current economic situation, this would not be a good idea. Buying stocks was always good advice because we had a post-WWII manufacturing and baby boomer economy. People would always say, “Buy stock market now!” when stocks were down. Looking ahead, we will be heading for deflation, which not many people alive have experienced. The last time the United States faced deflation was during The Great Depression. Deflation means a decrease in prices across the board. This goes for real estate, stocks, gas, food, and discretionary items. The good news is that there’s a way to profit from what’s coming. It’s possible to short the stock market, which means you will make money when the stock market goes down. You can do this by buying a short ETF. There are short ETFs like SH for the conservative investor and more aggressive, leveraged ETFs like FAZ or TYP for the more aggressive investor.

The Dow Jones Industrial Average is going to fall to at least 6,000 within the next year, with 3,000 to 4,000 not out of the realm of possibility. What most people don’t realize is that banks are currently hiding massive amounts of debt, baby boomers are saving opposed to spending, and there is a major debt crisis forming in Europe. If you take advantage of this type of opportunity now by selling stocks and shorting the stock market, you will have an opportunity to live very well. You will not only make money, but everything you want to purchase will be cheaper.

The best part about all of this is not shorting the stock market now, but buying stocks in a few years. If you think 2008 offered bargain basement prices for stocks, wait until you see 2011-2012. Since you will always make more money on the way up, you will have the opportunity of a lifetime. Imagine being able to buy MSFT at $8 or WMT at $20? This might sound ridiculous now, but a year or two from now, you will be able to buy stocks at these discounted levels.

Enjoy your stock market profits on the way down, as well as on the way back up.

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