About Stocks: Market Cycles Create Stock-Buying Opportunities
 | from Ken Little
The worst quarter in almost six years is behind us, but does that mean the market has hit bottom? Unfortunately, the only sure way to know is to look back after the fact. A big question is how the market will react to the Bush plan to close the barn door (but not very much) now that most of the cows have been turned into quarter-pounders. A major overhaul of financial regulations isn't going to happen anytime soon and certainly not before presidential elections in November.
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In the Spotlight |
Market Cycles Create Stock-Buying Opportunities
Observant investors can find good stocks in just about any market, however it is easier in some situations than others.
| | Interest Rates and Stock Prices
The direction of interest rate movement is of primary importance to the stock market. The recent rate cut by the Fed was a good example of what can happen when the market wants some good news and responds with big bump. Although timing the market is usually not a good idea for long-term investors, it makes sense to be aware of upcoming events that are likely to move the market. If you were planning to sell and knew the Fed was planning a rate cut, you should hold off until after the announcement to pick up any bounce. Of course, if a rate hike was anticipated, you might want to sell before the announcement. In many cases, the market prices a rate hike or cut in advance of the actual event, so there is often little change in the market. However, when the market is particularly volatile, the rate cut or accompanying statement can move prices significantly.
| Buying Growth Stocks is all about the Future
What will the stock do tomorrow? Will the company continue to grow at a faster pace than the market in general? Important questions for the growth investor. Keep in mind that growth stocks in the right industries have done well in the past recessions and, as a group, did very well when the economy picked up. Investors confuse the economy and the stock market - they are not the same. The overall market is slumping badly, but 40 stocks hit new highs yesterday.
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