Warren Buffett has his own Philosophy of trading, that is you must have a target for trading. What is the purpose of your trading? That is when you fixed your target, you will aim at that target and would not be Dust in the Wind as in the current correction.
Make it down to earth, some want to earn more money so that he can set up his own business on their own. Some for emigration because they are not satisfied with their society, or else will be forever in day dreaming. Some want to earn enough money to have a trip on a luxurious liner to Mediterranean Sea, Caribbean Sea and then South Pole or North Pole, for during the trip he cannot go to work and only spend money for several months. Some want to earn money to study EMBA in world class universities, and learn finance in Wall Street, such as the ultimate target of a soccer player is at World Cup, an athlete is at Olympic Games, so a finance people should aim at Wall Street, no matter working or learning. If you don’t have a target, will be easily as Dust in the Wind.
Let’s take a look at DJIA, the adjustment has started just for 7 days, but there are 250 trading days in a year. The highest point is 48431 on Nov 12th, and closing of Friday is 46245, just 2186 points. Only 4.7%, my god! So, people are afraid of a slump or AI bubble. The lowest point of correction is still above the 100-SMA which considered as mid-term support, and previous low is 45452 of Oct 14th. No problem in chart analysis! S&P reached the top on Oct 29th at 6920, last closing is 6602, only 318 points, also 4.6%, but penetrated the 100-SMA and closed up above it, still higher than previous lower on Oct, still higher than previous low of Oct 10th @ 6550. The record high of NASDAQ is also on Oct 29th at 26182, the closing price of Friday penetrated the 100-SMA, but closed above it at 24239, a fall of 1943 points @ 7.4%, but still above the previous low. When in comparison with the circuit breaker of 2020, it’s nothing at all. In Wall Street, a correction is 10% and when reaches 20%, it is in bear market, so all investors should prepare well to meet with a fall of 15% at any time and should treat it as usual. Even if bear market comes, sometimes can have a short bear market, that is golden pit.
Current market situation can be said as mini golden pit. It is not likely to rebound in a single evening, but even if stay at current level, still normal. When investors want to buy at low, should buy those high above the 250-SMA. Those under the 250-SMA of course will have more room for rising, but takes longer time.
Such as defensive stocks, COST is always known as defensive, when it first went under the 250-SMA in July, people thought it would go up soon, but now goes back to the April bottom. V(Visa) again penetrated the 250-SMA this month and is near the low of April. That is why I always say, the top 10 market capitalization is already defensive enough and have the power of leading the market. Slow falling is meaning less when the recovery is even slower. A potential stock should have strong leading power to rise and to recover in a fall.
Don’t worry, every quarter stock index components will be re-organised, slow growth and sluggish stocks will be kicked off, energetic stocks and new stars will be added. That’s why the US market keep on rising. Don’t complain! The whole world is following US, just the same. Warren Buffett said he would like to hold stocks forever, it’s a little exaggerated. Anyway, hold them for Mars Landing for first stage, and second stage for Pay & Performance of Elon Musk is normal and the third stage is for Space AI. These 3 stages covering medium, long and longer-term. Unless you need money, no need to take out, it will be better than holding forever. For longer term scheme, buying at a fixed date for 12 consecutive months means you can buy very near to the mean average of the year. It is surely suitable for long term investment like aiming at the salary of Elon Musk, but it needs KUNG FU, not as easy as envisaged.
Anyway, buy before the trend blooms, no matter it is quantum computer, TPU, ASIC, driverless driving, health AI, Space AI or Mars Landing. Don’t buy those when everyone is talking. Warren Buffett held 31% cash in early November which is quite a high ratio recently. This is what copy trade cannot copy. So better do the trading on your own research. Too many cheap stocks to buy now, but too little capital. Must have a cleverer decision and not just rely on copy trade.