Why You Need to Adjust Expectations in Stock Trading The gloomy month of sell-offs, October, is a reminder of the importance of adjusting expectations and keeping them realistic
TradeZero Ocean Place Cable Beach, Unit #1 Nassau, Bahamas
Adjusting expectations is vital for doing well in stock trading and investing. The month of October showed that things can get depressing, and you need to accommodate times like that. Markets can rebound for sure but there are times of gloom interspersed in between. A Rebound for US Markets after Days of Sell-offs On Tuesday, the 30th of October 2018, US markets rebounded following some gloomy days that witnessed sell-offs. There were many more buyers than there were sellers, particularly due to the fact that there really wasn’t any apprehension-causing news from the corporate or economic side. In the final trading hour, the rally kept intensifying just like how the downside was intensifying in the past sessions. It is an indication that volatility is in the air, observes Investopedia Editor in Chief Caleb Silver in this article. October has been a really tough time for stocks. This month saw the DJIA sink to -6.5% which was its worst since August 2015. The S&P 500 was -8.3% which was its worst since May 2010 while Nasdaq was -11.5% - its worst since October 2008. Red October for Mega-cap Companies The month of October is now called Red October since it spelled danger for some, really large mega-cap companies making up the S&P 100. Amazon ($AMZN), IBM ($IBM), Nvidia ($NVDA), Occidental Petroleum ($OXY) and Caterpillar ($CAT) are some of these who were down nearly 20% or more. And not all of these are purely tech stocks. Tuesday, $GE shares were trading below $10 as a result of the company announcing its dividend cut to one penny per share, affected primarily by struggles in its power division which the company said would be divided into two units. What the statistics regarding the worst performances of these major stocks do is help us see things from the wider perspective. With rampant volatility and market sell-off going on around us, these stats don’t do much good to us though. Days like these are to be expected even if there is a bull market, as was seen in the past decade despite that period being in the middle of a long bull market. Facing the Times When the Market is down Silver reminds that the number of days when the market is up is almost the same as the number of down days. The only difference is that the days when the market is up are higher than the days when the market is down, on average. Not everyone will be prepared to face such down times, but it is something you need to go through if you’re investing in stocks. If you don’t believe you can handle it, there surely are alternative investment options.
www.tradezero.co
+1.954.944.3885
The Rebounding Has Begun, but Expectations Must Be Adjusted The earnings season has certainly motivated stocks to persevere and move up higher. Generally, there have been good results. However, investors weren’t really excited by it since they needed much better than “good,” particularly when they were faced with disturbing news and apprehension about the potential economic slowdown, a yield curve that is flattening, the war of tariffs and the rising rates of interest. Silver feels that this quarter could just about be the best it gets for some time and that our expectations need to be adjusted and realistic. Silver quotes analyst Liz Ann Sonders of Schwab’s who said that the comps for 2019 and 2020 would be much lower. That calls for some significantly adjusted expectations then.
www.tradezero.co
+1.954.944.3885