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| Coconut groves set in a valley against the backdrop of mountains near the city of Coimbatore |
August has been a month filled with stomach-churning swings, with markets alternating between strong rally days and dismal down days- with events largely data-driven (Treasury yield curve) or by trade commentary or actions (Twitter, Chinese media outlets, and Trump's sudden decision to raise tariffs on Chinese goods towards the beginning of the month).
During such turbulent times, The Ignorant Investor tends to lock in his long trades, ensuring their stories aren't upset by the changing times, and focus his efforts on short-term trading. After all, inefficiencies in the market often result in wild swings in response to news. When that swing becomes too exaggerated, a deft series of trades can results in decent short-term return.
After a busy start and middle of the month, The Ignorant Investor now finds himself among friends in far away India, taking a quick break from the volatility in the equity markets and never ending trade drama. As emphasized month after month in 2019, a cautious stance towards the markets is warranted, choosing quality names with compelling stories from sectors that are not immediately affected by trade tensions. And remember to be patient! Stock market investing is similar to baseball, where the batter is the investor and the balls the pitcher is throwing to you are potential investments in the market. Don't be afraid to just sit back and wait for that perfect pitch before you dig your heels in and take a swing (as always, consult your coach too - your investment professional for this analogy - before taking that swing!).
