Mood Swings

I'd like to think that with so much volatility (not uncertainty) in the market it would be prudent and wise to actually consider having cash on the side. I'm not talking about selling EVERYTHING at a loss nor am I telling you that my views of the market have made a complete 180 and I feel the market is going south in the long run. On the contrary, what is happening with our market is a healthy, although prolonged, period of consolidation/correction; which to me is more of a signal for buying opportunities.

Some people have considered range trading and although I am not entirely against that strategy. It would not be something I would recommend to the faint of heart or to those who do not have time to monitor market action. There are a few things I would suggest that can take the edge off the anxiety. These may not be overnight solutions but in the long run, this can be beneficial to your overall trading strategy/nerves.

1. Do YOUR homework! The reason I capitalized YOUR is because a lot of us simply read one or two reports/blogs/forums/whatever else and conclude that this is either a buy/sell/hold. That is not your homework not by a far cry. It is someone else's and you have simply tagged along for the ride. What numbers are you comfortable with? Does the company have those numbers? What kind of business is the company engaged in? Do you have any idea how these businesses are run? What potential risk/rewards can you get from this company?

2. Set aside some cash. If you don't have any at this point, it's fine take comfort in knowing that you've done YOUR homework and that the companies you have done research in are good solid companies that will bring results in the long run. If you have not done your research, it's a lesson to be learned. Forget it, move on. Hope for the best and cut when you can't take any more.

3. Keep in mind value and price are two different things. Determine the value and buy at a price.

4. Emotions. I've been an avid reader of Mr. Gus Cosio's blog ever since a friend of mine introduced me to him and although my views may not necessarily toe his line all the time. I am in agreement with how he describes emotion in the stock market... your enemy.

Recently, I've been told by a friend of mine that he's been holding on to one particular company for quite some times, DMC. It surprised me more than anything else how quick profits have changed views of certain people. He imagined a long-ish hold to be a matter of months. Quick profits changes people's perspectives. Again I am willing to stay bullish with this particular company, DMC. It's got good growth potential with a diversified portfolio ranging from construction, real estate, mining, power generation, utilities. The numbers provide for a very convincing buy; low PE ratio, EPS growth over the past years and consensus estimates' for the coming years, good dividend policy, and much more. Intangible factors provide for good investment as well; management, potential IPO of subsidiaries, etc. So I'm very comfortable staying with DMC. Its currently trading at 33-ish not bad for a company I've previously said "I would be a buyer even at 40". But hey don't take my word for it; do YOUR homework.