Don’t worry if the market falls

In today’s volatile market environment, conditions are always changing; it is generally observed that first day trading is the most effective time. First day trading refers to trading on the first day of the month. It has been observed that it is best to begin investments on the first day of the month in those companies which are going a little on the low side as per standards. It was recorded that the S&P index gained 17 % on the first day and gained only 1.7 % during the rest of the days in the rest of the month, on average. So if someone misses out on the first day of the trade it will be a big miss. In the year 2010, the S&P accounted an estimated 123 points out of 134 points of gains in first day trading, while on the contrary, during the rest of the days the market was flat.

David Rosenberg, strategist and economist in Toronto at Gluskin Sheff, said that the Fed comes and buys shares on the first day of the month. He added that the first day of the month is the most reliable period as per the records and people must stick to this day until it goes the other way. It was observed that on 31st January 2011, the S&P recorded 1,276.34 and it rose to 1,307.59, on 1st February 2011, it showed an increase of 2.44 %. Through 24th February 2011, the S&P was recorded to be at 1,306.10 and the next day it was up by 1 percent, to 1,319.88.

Recently, a central banker from Australia, Warwick McKibbin, warned the Australian economy that commodity prices all around the globe are becoming a bubble. The Central Bank will come under pressure if the bubble explodes. The pressure will be to fight against rising prices or inflation, which will be controlled by reducing interest rates rather than decreasing export prices. He added that it could become a much bigger problem than faced from 2004 to 2007. It could lead to a financial crisis which will be worse than the 1930s.

One must not get worried about the rise in the price of oil, or the market of Saudi Arabia going down by 5 %, or even a scenario of inflation that causes bank shares in China to go down. One must look at the health of the economy and various ways to overcome the problems occurring in the economy. The market will rise and fall; some will be upset, while others will be happy with the change. The fluctuation will happen again and again and will disturb even the most clever investment strategies. But people must not lose hope, and look forward to overcoming the problems we face with innovative and effective ideas.

- Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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