Extreme Moves
Research for Online Investors

by John Dalt

5/21/10

The market has been down for six days in a row.  Thomas Paine said, “These are the times that try men’s souls” when speaking of greater calamities.  We must keep the day-to-day mechanizations of the market in perspective.  Watch your trailing stop losses.  We have a couple of higher volatility stocks in our long-term portfolio that are in trouble.

We have chosen not to sell at this time.  Should we throw out good companies in a general market dip?  These companies are down because of external factors.  Greece and China come to mind.  We have sold some stocks in the last four months when they became overpriced.  We thought we would rather have the cash than the stock at the then current price.

If you feel you have to do something, you might think about rebalancing your portfolio.  Normally, we think of this at the end of the year.  But with the market dip, now could be a good time to bring your holdings into balance based on the current market valuation.

You can access our ideas on re-balancing your portfolio in our Investor Resources.  Many professional stock investors re-balance their portfolio during market extremes.  This serves to reduce exposure to stocks that have appreciated the most, and increase your ownership of companies that may be undervalued.

This only works if you have done your homework buying good quality value stocks.   We can help you if you like with our Long-Term Portfolio service.

Both houses of Germany’s Parliament have approved participation in the $1 trillion bailout package to stabilize the euro. Germany will provide loan guarantees for $184 billion in debt for eurozone countries. Angela Merkel, Germany’s Chancellor, has paid a heavy political price. Her party has lost control of the upper house of parliament, the Bundesrat. With this approval by the German government, markets may settle down. If investors and analysts feel the crisis is over in Europe, perhaps the market can concentrate on recovering economies and which companies will grow profits.

To the Mailbag:
This was sent by subscriber S.M., retired Vietnam Marine. I was best man at his wedding. I cannot verify, but teared me up, so I felt it was important to pass on.

A soldier’s wife got a call that her husband had been wounded in the shootings at Ft. Hood, TX. He had been shot four times and was in surgery. She drove all night from Dothan, AL not knowing what to expect. Upon arrival she learned her husband was recovering and would be ok. When she went to his room he was awake, and already had visitors. The nurse took this picture. Press was not notified.

S.M. reports to me that President Bush rushed to Ft. Hood without any secret service escort, going straight to the hospital. He & Laura stayed for six hours comforting survivors and families of KIA. You may receive an email with the complete story from one of your friends. I won’t repeat it all here. I am just reminded, and try to live my life this way. “Heroes run to the fire.” May we all do so well.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s en.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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