> Stocks falling, the cue for their return is news on government action

Stocks falling, the cue for their return is news on government action

Posted on Friday, November 16, 2012 | No Comments

With people becoming excessively worried over the fiscal cliff in the U.S and the debt crisis in Europe, stocks dropped significantly. What they did wrong is that they sold low and bought high. This is no way to invest, and it is definitely the easiest way to lose any potential gains.

S&P rose 0.5 percent, or 50 basis points to 1359.88 at 4 p.m eastern U.S time. As Walter Hellwig mentioned, any good news is going to cause prices to rise significantly, and any bad news is going to cause them to drop to the pits of... yeah. This is mostly due to the market being oversold and there being a lot of foolish investors. Anybody who can understand basic psychology can really see that the market is full of these type of "reactors" who react on impulse on good or bad news. Thus, with the prices dropping, it's a perfect time to buy in as they rise. The saying "no news is good news" doesn't take effect here. It's "good news is good news" and "bad news is bad news".

As the European debt crisis begins to solve itself, international purchases of U.S assets are down the drain, plunging from $90.3 billion in August to $3.3 billion in November. The U.S needs to take action, and when news comes out that action will occur, it's time to buy those stocks as the prices fly up.

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