by Ernest Bonnett

Created on: October 25, 2009   Last Updated: October 26, 2009

The stock market has more to do with observing consumer trends and attitudes than timing. Timing is a misnomer. You need to be able to read consumer confidence, spending habits, and spot the next big thing before your competition. Knowing when to buy into a company or sector is just as important as to knowing when to get out.

The old adage Buy Low and Sell High is a truism. Markets rarely move overnight. There are always a series of events, trends and warning signs available to the public that will help you decide when to buy or sell your stock if you know where to look. If you are trying to time the market, please put down the television remote control and read the trade magazine or newsletter of company or industry/sector of the economy you are going to invest your hard earned dollars into. Your local major bookstore or library carries these periodicals or you can search on-line!

Learn to read an earnings report and its balance sheet. This is very, very important. It shows the true inner dynamics and health of a company. It is now almost impossible to fudge the books due to the recent accounting scandals that occurred a few years ago. A wealth of information about a company is contained in these reports. You can spot how the company truly is performing without having to listen to the spin of their publicist.

A very well known public company, after swearing that one of their highly prized divisions would never be sold did sell the division a few short months later. The spin about the sale was that by selling the division, this would create a synergy with the rival company it was sold to but the parent company would still be able to leverage the strength of the sold unit. The balance sheet section of the earnings report of this public company showed the truth. The operating costs and future litigation against the prized division was too high and would be detrimental to the parent company. It was more profitable to sell the prized division!

If you follow the earnings report and balance sheets, as well as industry articles of companies, you should begin to be able to spot trends when an major event is about to occur. Depending on the company, you could either get out (sell while the stock was high) or buy more stock by waiting for its price to drop and accumulate more of the stock at a bargain basement price. Keep in mind, some companies rebound!

Here is my last piece of advice. When too many people in the general public that have very little industry or sector knowledge begin to invest in a product, goods, services or company of that industry or sector, sell your stock! Remember when everyone began to invest in tech stocks? We then had oversaturation and collapse. Remember when everyone began flipping properties and speculating in the housing market? We then had oversaturation and collapse. Is this too recent and painful a memory for you? How about railroad stocks? Look it up as well as other financial collapses throughout our attempts to time the stock market to be rich and happy.

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