Stock Market Crash of 2007 - How To Trade Stocks During The Bearish Corrective Wave
While many traders will classify the market drop of over 200 points on the Dow Jones Industrial Average in March 2007 as a pullback and not a crash, all traders will agree that it was a market correction that had to come to dilute the long term excesses of bullishness and euphoria over the years of strong uptrend and shallow pullbacks.
Recently, I was in the kitchen, watching my wife as she was cooking an exotic dish of stew pork in aromatic spices and garlic. With the aromatic scent in the air,I could not help but paid attention as she proceeded to tell me some facts about the nicely cut chunks of meat in the pot...and about knives.
"I would rather have two good and sharp knives than the entire set of knives that were of lower quality that we got as a present from your friend," my beautiful wife said. "Two good knives that are sharp and of good quality will not go blunt easily, and can cut easily into the meat for a very long time without sharpening than the entire battery of knives that are of low quality".
As a professional stock trader and a trading coach, I cannot but marvel at the aptness of what my beautiful wife had said about picking knives, and how they would relate to picking stocks after a market crash. Indeed, many traders are unable to trade during bearish times as they have not been exposed to bearish periods before, having only begun to trade during the past few years when the stock market had been bullish.
So how would you trade during a bearish period?
When the stock market has crashed, and a strong pullback is in progress, it is wise to wait for the market to stabilise. Statistics have shown that stocks fall around 3 times faster than they have taken to move up in price. Any corrective move in stocks will bring fear into the eyes of traders who have not been exposed to deep market corrections before.
But when the stock prices have stabilised, then the stock selection process is important. And that is when the lesson of selecting cutting knives from my beautiful wife comes into play.
Like the knives, it is more profitable for you to select a few stocks that are of good quality that has stumbled in price, but which have good growth potential, and good management. These good stocks now are selling at attractive Price-Earning ratios brought low because of the price pullback and will be good stocks with lower risk.
"I would rather have two good and sharp knives than the entire set of knives that were of lower quality...", my wife beautiful had said.
How true it is in selecting the stocks to trade during a bearish period.
Spend time researching your stocks. Seek out the good quality stocks, and buy into those that have the better quality as they will rebound fast in price than buying a host of cheap, penny stocks that have been dumped by discerning traders during the bearish market, with little prospect of recovering fast.
In bearish times, there is always a flight back to quality stocks and like knives, you must select those of good quality.
Recently, I was in the kitchen, watching my wife as she was cooking an exotic dish of stew pork in aromatic spices and garlic. With the aromatic scent in the air,I could not help but paid attention as she proceeded to tell me some facts about the nicely cut chunks of meat in the pot...and about knives.
"I would rather have two good and sharp knives than the entire set of knives that were of lower quality that we got as a present from your friend," my beautiful wife said. "Two good knives that are sharp and of good quality will not go blunt easily, and can cut easily into the meat for a very long time without sharpening than the entire battery of knives that are of low quality".
As a professional stock trader and a trading coach, I cannot but marvel at the aptness of what my beautiful wife had said about picking knives, and how they would relate to picking stocks after a market crash. Indeed, many traders are unable to trade during bearish times as they have not been exposed to bearish periods before, having only begun to trade during the past few years when the stock market had been bullish.
So how would you trade during a bearish period?
When the stock market has crashed, and a strong pullback is in progress, it is wise to wait for the market to stabilise. Statistics have shown that stocks fall around 3 times faster than they have taken to move up in price. Any corrective move in stocks will bring fear into the eyes of traders who have not been exposed to deep market corrections before.
But when the stock prices have stabilised, then the stock selection process is important. And that is when the lesson of selecting cutting knives from my beautiful wife comes into play.
Like the knives, it is more profitable for you to select a few stocks that are of good quality that has stumbled in price, but which have good growth potential, and good management. These good stocks now are selling at attractive Price-Earning ratios brought low because of the price pullback and will be good stocks with lower risk.
"I would rather have two good and sharp knives than the entire set of knives that were of lower quality...", my wife beautiful had said.
How true it is in selecting the stocks to trade during a bearish period.
Spend time researching your stocks. Seek out the good quality stocks, and buy into those that have the better quality as they will rebound fast in price than buying a host of cheap, penny stocks that have been dumped by discerning traders during the bearish market, with little prospect of recovering fast.
In bearish times, there is always a flight back to quality stocks and like knives, you must select those of good quality.
While many traders will classify the market drop of over 200 points on the Dow Jones Industrial Average in March 2007 as a pullback and not a crash, all traders will agree that it was a market correction that had to come to dilute the long term excesses of bullishness and euphoria over the years of strong uptrend and shallow pullbacks.
Recently, I was in the kitchen, watching my wife as she was cooking an exotic dish of stew pork in aromatic spices and garlic. With the aromatic scent in the air,I could not help but paid attention as she proceeded to tell me some facts about the nicely cut chunks of meat in the pot...and about knives.
"I would rather have two good and sharp knives than the entire set of knives that were of lower quality that we got as a present from your friend," my beautiful wife said. "Two good knives that are sharp and of good quality will not go blunt easily, and can cut easily into the meat for a very long time without sharpening than the entire battery of knives that are of low quality".
As a professional stock trader and a trading coach, I cannot but marvel at the aptness of what my beautiful wife had said about picking knives, and how they would relate to picking stocks after a market crash. Indeed, many traders are unable to trade during bearish times as they have not been exposed to bearish periods before, having only begun to trade during the past few years when the stock market had been bullish.
So how would you trade during a bearish period?
When the stock market has crashed, and a strong pullback is in progress, it is wise to wait for the market to stabilise. Statistics have shown that stocks fall around 3 times faster than they have taken to move up in price. Any corrective move in stocks will bring fear into the eyes of traders who have not been exposed to deep market corrections before.
But when the stock prices have stabilised, then the stock selection process is important. And that is when the lesson of selecting cutting knives from my beautiful wife comes into play.
Like the knives, it is more profitable for you to select a few stocks that are of good quality that has stumbled in price, but which have good growth potential, and good management. These good stocks now are selling at attractive Price-Earning ratios brought low because of the price pullback and will be good stocks with lower risk.
"I would rather have two good and sharp knives than the entire set of knives that were of lower quality...", my wife beautiful had said.
How true it is in selecting the stocks to trade during a bearish period.
Spend time researching your stocks. Seek out the good quality stocks, and buy into those that have the better quality as they will rebound fast in price than buying a host of cheap, penny stocks that have been dumped by discerning traders during the bearish market, with little prospect of recovering fast.
In bearish times, there is always a flight back to quality stocks and like knives, you must select those of good quality.
Recently, I was in the kitchen, watching my wife as she was cooking an exotic dish of stew pork in aromatic spices and garlic. With the aromatic scent in the air,I could not help but paid attention as she proceeded to tell me some facts about the nicely cut chunks of meat in the pot...and about knives.
"I would rather have two good and sharp knives than the entire set of knives that were of lower quality that we got as a present from your friend," my beautiful wife said. "Two good knives that are sharp and of good quality will not go blunt easily, and can cut easily into the meat for a very long time without sharpening than the entire battery of knives that are of low quality".
As a professional stock trader and a trading coach, I cannot but marvel at the aptness of what my beautiful wife had said about picking knives, and how they would relate to picking stocks after a market crash. Indeed, many traders are unable to trade during bearish times as they have not been exposed to bearish periods before, having only begun to trade during the past few years when the stock market had been bullish.
So how would you trade during a bearish period?
When the stock market has crashed, and a strong pullback is in progress, it is wise to wait for the market to stabilise. Statistics have shown that stocks fall around 3 times faster than they have taken to move up in price. Any corrective move in stocks will bring fear into the eyes of traders who have not been exposed to deep market corrections before.
But when the stock prices have stabilised, then the stock selection process is important. And that is when the lesson of selecting cutting knives from my beautiful wife comes into play.
Like the knives, it is more profitable for you to select a few stocks that are of good quality that has stumbled in price, but which have good growth potential, and good management. These good stocks now are selling at attractive Price-Earning ratios brought low because of the price pullback and will be good stocks with lower risk.
"I would rather have two good and sharp knives than the entire set of knives that were of lower quality...", my wife beautiful had said.
How true it is in selecting the stocks to trade during a bearish period.
Spend time researching your stocks. Seek out the good quality stocks, and buy into those that have the better quality as they will rebound fast in price than buying a host of cheap, penny stocks that have been dumped by discerning traders during the bearish market, with little prospect of recovering fast.
In bearish times, there is always a flight back to quality stocks and like knives, you must select those of good quality.
posted by zzzzzzzzzzz at
2:02 AM
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