Monday, October 13, 2008

Watch for big losses tomorrow

I have a bet with a colleague (one cup of coffee) that the market will finish down tomorrow (or today if you're reading this on Tuesday, October 13, 2008). My belief is that with today's (yesterday's) 11% gain, the market players will be interested in taking a quick profit.

You see this quite often when things become irrational. People get in, see a large gain, and get out. If you're thinking about doing this be careful. Warren Buffett is not a big fan of this behavior. He says that while yes, you can occasionally time the market, you'll most likely not. He also says that the commission fees will eat you up.

An example of commission fees at work is my Fidelity account. I pay $20 for each purchase and $20 for each sale. Since I'm a cheap ass, I buy large and hold.

I know there are other online brokerages that charge much less. Some as low as $8 I'm told. I've thought about switching, but I kind of like having everything in one (or two) spots. And since I'm forced to use Fidelity for my Employee Stock Purchase Plan, I've just stuck with them.

1 comment:

bosshart said...

Seems you're right so far. From Warren Buffet, "we believe that according the name ‘investors’ to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a romantic".