Subject: The Market Is Down, Sell off?

From: "Gray Zhu, 800-289-2498, 212-279-6700" <[email-masked]>
Date: Tue, 21 Jun 94 22:14:55 CDT

The Market Has Been Down In The Past A Few Days:

==================    IC940621: Investment Club  ======================

1. Why the market is down? .............................. Gray Zhu
2. Should I sell my stocks/funds? ....................... Gray Zhu
3. Buy more ............................................. Gray Zhu
4. Correction: Gopher sites ............................. Jiang Yuan
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   (be sure to read the Disclaimer in the end if you have not read)

1. Why the market is down?
 	
the market down is due to the fear of inflation, and it has been down
all over the world. The logic is when the inflation comes, there are
more dollars around, that means the dollar is weak. this year, the
dollar is down 10% vs Japan Yan, down 8% vs German Mark.

Foreigner tend to withdraw their money from the US stock market,
because they think the dollar is not worth much even if their US
stocks make money.  Sell-off of US securities causes the stock market
to drop.

the US govenment is going to take action to defend the dollar soon or
later.

How to defend the dollar: a) Increase the interest rate, which makes
dollar not that easily available b) Central Bank buy dollars. How:
sell gold (am i right?).  c) Foreign exchange rate is self-adjusting.
when dollar is weak, it makes US export easier, because of relatively
lower cost vs Yan and Mark. When exports gain ground, the dollar
becomes stronger.

2. Should I sell my stocks/funds?

the market went down basically in 6 (unconsecutive) days this year, it
goes up in a similar also. Remember I had posted a stats, which says
in the ten years from 1980-1989, the S&P market average gained about
17% per year, if you missed the best 10 days, the average annual
return is about 12%, if you missed the best 40 days the return is down
to 3%.

you can never predict the market tomorrow, the best strategy to invest
is "STAY IN THE MARKET", not "TIMING THE MARKET".

the Fidelity Magellan Fund is the largest fund in the US, with the
great Peter Lynch as manager, one fact about this fund is that 60% of
the investor invested in this fund lost money, because they could not
swallow market down-turns, they "BUY HIGH, SELL LOW" - worst move when
investing. If you believe the fundalmentals of a stock or fund, you
should stay.

IF YOU CANNOT STOMACH A FEW DAYS OF MARKET DOWNTURN, YOU SHOULD NEVER
CONSIDER YOURSELF AN INVESTOR, OR YOU WILL NEVER BE A SUCCESSFUL
INVESTOR. BECAUSE THE MARKET IS UP AND DOWN ALL THE TIME, EVERY SINGLE
DAY.

Some investors simply stall their investment decision, waiting for
something to happen: for the market to rise, for the market to settle.
when you saw it happens, it has happened. Unfortunately, there are
only a few best market days.

3. Buy more 

The US economy is in recovery, industry productions are growing,
inflation is not really a threat at least currently. Inflation is
caused by low production and high salary. The US industry has become
more diversified globally, it is very unlikely there is going to be a
market crash.

Because the market is down, most stocks are down, but remember the
dollar is going to come back, the companies earnings are becoming
stronger. Some stocks are more than 10% down, even if the companies
earnings and growth no change, only the dollar is back, you can gain
10%. So, it is a good time to BUY, and BUY MORE if you have it, if the
market is going further down, BUY MUCH MORE providing you trust the
fundalmentals of the company or a fund. this is so called DOLLAR COST
AVERAGING, and BUY LOW, SELL HIGH.

4. From: [email-masked]

You may gopher ifcss.org or cnd.org for previous issues of ICnet.
It's /org/icnet on ifcss.org.  cnd.org has a directory that mirrors
the content of ifcss.org, and is /ifcss/org/icnet.

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