Shanghai Correction (stock market decrease in Finance terms)!
First, I want to let you know that I FINALLY posted comments about Ben Bernanke's Federal Reserve testimony last week. Just click the link - the post is old enough that it does not show up unless you have a subscription (no, I don't make any money from subscriptions OR the blog - I just do the blog for fun and grins - laughing!)!
From the China Daily (China's official English newspaper - besides China View which for some reason doesn't report much about the stock markets, in Shanghai or Shenzhen) and the FT (Financial Times):
Example? Well I thought you would never ask!
A 50% gain from 1000 is up 500 right? So now that we are at 1500 what is a 50% loss? 500? Nope, now we go down by 750!! so a 50% gain followed by a 50% loss gets us to 750. Be careful how you read those analysts numbers!!
Having said all of that - soon WILL be an excellent time to enter the market again. Maybe within the next 3 months, maybe a little longer but market timing is VERY, VERY difficult and extremely risky. The better plan is to begin sometime soon to find a few good stocks and place some money into them over time, dollar cost averaging is what we call this.
WHY NOW - isn't this the WORST TIME? The WORST time is when the markets begin to look at the future as always being better than now. Stock markets ALWAYS look FORWARD. So when the future looks better than now, the markets will go up as investors begin to put their money back into stocks!
From the China Daily (China's official English newspaper - besides China View which for some reason doesn't report much about the stock markets, in Shanghai or Shenzhen) and the FT (Financial Times):
Finance and Investment people always talk about a fall in the stock market as a correction! Correction my goodness, we lost 5.5% of our money (paper money maybe but still - that's less wealth).China stocks fall 5.5% in a correction
Oh, we've only lost 44.26% since Mid-October - a correction!! Laughing! I LOVE the next comment!:A fresh wave of selling hit China's equities on Wednesday, pushing a key index down more than 5 percent, amid a mixture of lingering worries.
The Shanghai Composite Index tumbled 5.5 percent to 3,413.90 points, marking a loss of 44.26 percent drop from its peak in Mid-October.
Analysts said the decline was a natural correction as the gauge surged nearly 400 points after touching the lowest level in nearly a year last Thursday.Analysts - WELL OF COURSE it was natural! After all, the index only retraced 198 points of the 400 point gain. Now realize everyone that a 50% increase is NOT the same as a 50% fall!!!
Example? Well I thought you would never ask!
A 50% gain from 1000 is up 500 right? So now that we are at 1500 what is a 50% loss? 500? Nope, now we go down by 750!! so a 50% gain followed by a 50% loss gets us to 750. Be careful how you read those analysts numbers!!
Having said all of that - soon WILL be an excellent time to enter the market again. Maybe within the next 3 months, maybe a little longer but market timing is VERY, VERY difficult and extremely risky. The better plan is to begin sometime soon to find a few good stocks and place some money into them over time, dollar cost averaging is what we call this.
WHY NOW - isn't this the WORST TIME? The WORST time is when the markets begin to look at the future as always being better than now. Stock markets ALWAYS look FORWARD. So when the future looks better than now, the markets will go up as investors begin to put their money back into stocks!
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