Today I’m going to give you my two cents on Dow 10,000.
Last Thursday’s Wall Street Journal headline read, “Dow at 10,000 as Crisis Ebbs.” No doubt the nightly news programs had a field day with that milestone the night before. And no doubt, a lot of individual investors in the U.S. took that as a sign it was OK to start wading back into the market.
Wrong.
Odds are that in the short term, you’re better off selling now than buying. The Dow is up 53% over the past seven months, and it needs a rest. If you’ve been heavily invested in recent months, as Cabot has, you should simply sit tight; you’ve got a nice profit cushion and the long-term technical indicators are still positive. But if you’re not yet in, don’t be suckered in by these headlines. Think contrarily. Wait until the market weakens after some bad news hits. Remember, the goal is to buy low and sell high.