The Dow Jones Industrial Average (DJIA) represents the stocks of big companies. The Dow represents stocks with dividends. The Dow is lean on technology and newer companies. And when the Dow is up and NASDAQ is down heading into the spring and summer doldrums, it can only mean one thing -- investors are becoming more cautious.
The DJIA closed up 20.56 to 1346.78. The NASDAQ closed down 15.78 to 2546.44. To be clear, I do not consider these figures to be statistically significant in magnitude to mean anything by themselves, except that this is happening more often and the DJIA keeps threatening new highs.
From my perspective, investors should generally ignore this noise and let the momentum guys, technical analysts, and traders worry about the ups and downs and trends. Investors should continue to look at individual stocks and the fundamentals of the companies they represent to find long-term value. However, when the market reaches higher and higher valuations, it does signal that patience is in order, and that investors should not change their approach or investing standards, there may be more opportunity in the next few months than there is now.
Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.
Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.
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Reader Comments (Page 1 of 1)
5-15-2007 @ 6:41AM
Michael Schneider said...
Watching trends can offer good gains esp. if you are early in catching a trend before it hits stocks. Moreover, with the economy slowing, certain areas and stocks are likely to do better near term. While the best gains are very long term holdings, you sometimes can get very good returns by attending to what is happening near term. by looking for stocks that have some near term catalyst and fit with the slowing economy as long as the economy is slowing-- it's a matter of controlling risk in the process of making choices and any advantage there can improve your performance. It's always good to have near term gains which give you the option of taking some profits or holding on for more. But in the end, it is the long term huge gains that really matter- I'd agree.