Friday, May 8, 2009

Investment strategy and a prediction

Predictions don't figure in my investment strategy. Instead, I compound our money. We collect the safest income-paying stocks in the market, augment our income by selling covered calls, and protect our capital with stop losses. The stock market's short-term fluctuations have no bearing on our decision-making. That said, sometimes I can't help myself...

I think we're seeing a classic bear-market rally in the stock market, for three reasons. First, the "junkiest" stocks are leading the rally. If this were a new bull market, I'd expect leadership from a new and exciting batch of stocks... not the dogs of the old bubble, like leveraged real estate companies and bloated banks.

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