Soak Up the Power of Positive Trading
By Rev Shark
RealMoney.com Contributor
5/3/2006 8:52 AM EDT
"Our lives are not determined by what happens to us but by how we react to what happens, not by what life brings to us, but by the attitude we bring to life. A positive attitude causes a chain reaction of positive thoughts, events, and outcomes. It is a catalyst, a spark that creates extraordinary results."
-- Unknown
Although the indices are at or close to multipleyear highs, it's very easy to have a negative attitude about the market. Energy prices are soaring, the indices have been rallying for many months, the Fed is jerking us around, the real estate market is weak, we are entering a seasonally weak period of the year, and if the news media coverage of gas prices doesn't scare you, you aren't paying attention.
Shouldn't we seek out the safety and security of cash as we wait for the inevitable market collapse? Why should anyone risk being optimistic with all of those negatives out there?
The answer: It is positive thinking that will make us money. The one great truth about this market now is that it continues to act well. Despite the legitimate concerns that so many have about where things are headed, we are holding up and many stocks continue to perform strongly.
The hard thing to do when there are so many logical and compelling negative arguments about the market is to maintain a positive mindset. But as is so often the case in the market, it's the hard thing that makes you the most money. Giving in to negativity right now is easy and feels safe, but it is not going to generate profits.
Bearish arguments often have a great emotional appeal to market participants. When our confidence falters and we run into obstacles it can be quite comforting to be pessimistic. If we are negative about the future of the market it helps relieve us of the obligation to work hard to make profits. If we are negative about the market all we need to do to be successful is to make sure we don't lose money. Negativity excuses us from the obligation of trying to produce gains; our jobs are much easier if we simply say, "I believe the market is going to do down therefore I will sit on the sidelines."
There will come a time when the market struggles and goes through an ugly decline, and that is when we should embrace the negativity. Now is not that time. There are some cracks in the foundation and some troublesome action, but there also is a good supply of money-making opportunities and we should pursue them with a positive and optimistic mindset.
We have a mixed start to the day with technology showing a little life, but some weakness in big blue chips such as PG and MRK hurting the DJIA and S&P 500. Oil is holding steady in front of inventory data. News is hitting that Merrill Lynch is raising its stock allocation to 50% from 40% and that is helping us in the early going.