There are quite a few terms often used in Wall Street that make no sense to anyone else. Now, we are finding that these terms make no sense to even those who work on Wall Street. Let’s start with a few often used terms that in current markets have largely become irrelevant.
Buy on the Dips – Buying stocks on a drop in their stock price. Once a time tested strategy has lately, with the extreme swings, has fallen into disuse.
Don’t fight the tape – Used to mean do not bet or trade against the trend. Anyone know what the trends in financial markets are these days?
Bottom Fishing – Buying stocks after a large sell off. Opportunities that used occur once in awhile for bottom fishing appear to be happening every week and we are yet to see the bottom.
Dead Cat Bounce – After a stock has dropped significantly, stock price bounces back modestly. Once a phenomenon in a handful of stocks that fell sharply and regained somewhat, has now lately become synonymous with the entire stock market.
Sell in May and Go Away – Implying summer doldrums when markets begin falling in summer and don’t recover till late winter. This year, Sell in November and markets May come back is more appropriate. S&P was flat from Nov 1 – May 1 and is up 3% since then.
Dovish/Hawkish – When Fed Reserve implies a lowering/raising of interest rates. Recent comments by various members of the Fed suggests they are confused as well on what to do with interest rates.
Timing the market – Act of moving in and out of the market or switching between asset classes using economic data or other indicators. Good luck with this strategy. Even the pros have being unable to master this one.
Future Wealth’s recommendation
In an environment like the one we are having, all these strategies only result in higher trading and commission fees for the average investor. And none of the gains. At Future Wealth, we invest in fundamentally sound companies and shy away from these largely ineffective strategies.