NZSX50 Index

[ratkin]

To offer a different view , those areas of caution have provided all the best buying opportunities during the bull market. No doubt the falls were all overdone due to traders stopping out , providing good buying times for long term investors.

Also , if the market does crash , i mean really crash then it is very likely to be very sudden and led by the US. One day we may wake up to see the dow has plunged 1000 points or more , unlikely but could happen. In this scenario then you would go down with the market , our market would open so low that you would take a very big hit.

Rather than be bound up in this mechanical process of yours i prefer to look at what is actually causing all this turmoil and using that information to take advantage of the mass selling to pick up stocks being unfairly bashed.

For example under your system you would treat a stock exposed to sub prime troubles exactly the same as you would treat a supermarket or utility stock. You wouldnt buy any of them .
With your methods now so widespread this creates big bargains in quality stocks that have no real reason to fall.

One day of course you may be right , the world may cave in, stocks may fall 50% and many companies could go to the wall . Way i look at it is if this happens we all in trouble anyway . Whose to say your banks wouldnt collapse taking your cash with them ?
Look at what happened to access brokerage a while back, and bridgecorp.

To sum up i prefer to be brave and force myself to buy when times get ugly, its not easy , human nature means we naturally want to do the same as everyone else , to seek reasurance in numbers etc, its tough going against the flow .
Scary , yes it is , but rightly or wrongly if i shall be commiting a few percent of my funds on monday , and if the market falls again tuesday then i will buy more.

Im sure that if you only ever bought shares when the mainstream tv news started their bulletin with a stockmarket crash story you would be well ahead of the game. If you sold instead then you would be well behind