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Finance For Dummies

Finance For Dummies offers personal finance information on investing, retirement investing, finance, insurance, credit cards, loans and more. Personal finance education is our goal.

Saturday, May 20, 2006

Investing in a Bear Market

The last few days the stock market has taken a hit, although it did recover a little on Friday. This is happening because people on Wall Street are concerned that the Federal Reserve will continue to hike up the Fed Funds Rate which many believe will grind the U.S. economy to a halt. Now if you were diversifed in your holding before the down trend this week you are probably doing o.k. despite the volitility. As discussed before market timing is difficult and you never know if this is the beginning of a long bear market or not. But you can still invest wisely in a down stock market. You need to do some research and find companies that have had positive earning reports (a financial statement that gives operating results for a specific period) recently and have been hit the hardest by this downtrend in the stock market. If they are a best in brand (best company in their sector) this might be an opportune time to invest because the price currently does not reflect the true value of the stock.

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