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Why I'm Buying Stocks TodayBy Jeff ClarkTuesday, July 6, 2010 "You have 74 new messages."
That was the response I received when I hit the "play" button on my answering machine after returning from a three-week vacation. There were plenty of "If you'd like to lower your mortgage..." and "Call to increase the interest rate on your savings..." type of messages.
But there were also dozens and dozens of calls from friends who wanted advice on what to do about the stock market – and all of the messages were left last week.
Everyone is bearish. Everyone is worried. And everyone wants to know if selling now is a good idea.
Nobody is interested in buying.
I didn't realize I had missed so much over the past three weeks. But after catching up on the news reports this weekend, going through about 2,000 unread e-mails, and reviewing three weeks worth of the financial articles and blogs I normally read on a daily basis, it feels like Armageddon is approaching.
Stock markets around the globe are declining. Currency markets are in turmoil. Country after country is threatening to default on its debt. International tensions are heating up. The list goes on and on.
No wonder everyone is bearish.
But here's the thing...
The stock market doesn't crash when everyone is looking for it. And if my answering machine is any indication, everyone is looking for it.
Of course, I'm bearish. I've written plenty of negative articles on the economy and on the stock market over the past year. So, yes, I'm looking for lower stock prices later this year.
But as a contrarian by nature, I start to doubt my thinking when everyone else agrees with me.
It doesn't matter how bad things look right now. The world has a habit of not coming to an end. So betting on Armageddon is a bad bet, and not one you should make today.
I'm not trying to be a Pollyanna, and my sunglasses don't have a rose-colored tint. The proper way to trade a bear market, however, is to buy into extremely oversold conditions and short stocks when they're overbought.
Based on the phone calls I returned this weekend, I'm buying stocks today.
Best regards and good trading,
Jeff Clark
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Discount stores BJ's Wholesale and Dollar Tree hit 52-week highs on Friday.
Euro up four weeks in a row now... the euro short is off.
Secondary education sector getting destroyed... Apollo Group and Corinthian Colleges at new 52-week lows.
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