GEMS: Emotional Times Create Opportunity

Jordan Kimmel |

Who would have thought the day Bin Laden was killed marked the short term high on the U.S. stock market - and the low coming on the S&P downgrade of U.S. debt?

We certainly do not know- and I do not think - this is the bottom for this correction - but who knows? What we do know is that looking back- every time there was an “emotional consensus” – we were at another turning point.

This sell-off has been the biggest and scariest of the 8 pullbacks of this bull market that began in 3/09.

We are down to only a handful of new highs- and over 1000 new lows! That was Friday- we are certain to see even more new lows register today. In the past I have seen 2000 new lows and 1 new high- that was a true bottom.

Nobody knows what turns this market- or from where. The T3 team has been great in providing the warning shots prior to the selloff. The hardest thing for an investor is to buy or add to your best stocks on pullbacks during panics like this.


Regardless of a stock's GEMS “score”, the market is dangerous. In a harsh pullback it is frustrating because often you can get stopped out of great companies. However, it's also best to remain flexible and alert for buy alerts. No doubt when you can’t find a reason to buy it is often the best time to be a buyer. We also know that most emotional trades (buys and sells) are often wrong when you look back in 2-3 months.

The key is to have dry powder and trade/invest without emotion.

*DISCLOSURE: No relevant positions

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DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
LCUT Lifetime Brands Inc. 12.97 -0.04 -0.31 13,738

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