Making Money - Hold Your Nerve In Early 2008

There can be no doubt that for investors 2008 has had a very bad start. For some it has been a nervous time and for others it has been a disaster. Values have fallen and if you have borrowed money to finance your shares you are probably feeling some anxiety.

From my research there are few stocks or funds, not to mention markets that have not taken a hit since January 1 (most since about mid November).

What amazes me about the market slump is the wide variety of opinions in how the market will preform for the remainder of 2008. On the negative side I have heard numerous financial and economic commentators remark that we have not seen the worst and that the sub-prime mortgage problems in the United States. This problem, will in turn affect China and other Asian markets and the smaller markets such as in Australia are in for some pain.

However, it should be noted that the chorus of this happens every 5 to 7 years anyway is definitely growing in both numbers and statue. History indicates that after a slump there is a strong rise. May be there are right!

Further, to this argument is that many companies have continued with project CAPEX (capital expenditure) for the immediate future and are still predicting high cash flows for the future. This is highlighted by many Australian mining companies predicting a rosy future.

I read a really insightful article from an Australian investor last week who noted that there are many cheap shares and funds available at the moment. It is an interesting thought. Anyone will tell you that the BEST time to buy is when the market is down and sell when the market is at a peak.

In November 2007 the Australian stock exchange peak at over 6800 points and I am sure many people bought that day. I wonder how many of them selling now. What a financial disaster for them

The only benefit in this strategy is that you are 100% sure that your current stocks are really bad and that any new stocks you purchase are about the sky rocket. A gamble it is

Further to this, who sold their stocks in January 2008. I have read that many on line systems that are used by "mums and dads" to buy and sell shares actually crashed during some days of January 2008 - but did the investment funds sell? I still don't know the answer but I suspect not.

May be we should hold our nerve and sit tight (may be like the big investment funds are doing).