Friday, August 15, 2008

To trade or invest during 2008?

Throughout these months I am torn between two ends - Should I sell off and book profits when the market moves up and re-enter again at lower levels or Should I just hold and follow the buy-and-hold strategy. I am sure many of you would have faced this dilemma. I still could not decide which one to follow. I basically want to follow the buy-and-hold principle but the markets are too volatile during this year where it really makes sense to sell at higher levels and re-enter later when the markets crash. Of course it is not known if the markets will crash again but there are too many factors that point to the inability of the markets to hold higher levels for a sustained period of time.

So trading can give you at least some returns during these volatile times but it is against the principle of investing. I have seen many stocks which were 10-15% in the positive and now they are way down at -20%. Is this loss of opportunity to make a decent return? Or does it make sense to just stick to your principles?

I am not able to decide on one. For the moment I am prepared to sell off stocks that are sensitive to interest rates and oil prices at higher levels and hold on to ones, esp technology, that I perceive as relatively stable. One drawback is of course if the Oil continues to fall then I can miss out on higher returns as these rate sensitives can move up pretty fast. This is a learning phase for me so I am just prepared to make mistakes and learn.

RK

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