Disturbing news from Dubai this week has only blown a little froth off the
top. But buying is the easy part of investment; knowing when to sell is much
more difficult.
When you buy shares, you do so in expectation of better things to come. If
subsequent events inconveniently refuse to conform to your hopes, you can
usually hang on and watch the idends roll up while you wait. When you
sell, you are effectively stopping the clock and closing the book on that
particular bright idea. Even when taking a profit, you may be racked by
doubts that even greater gains might have been obtained with a bit more
patience.
Fear and greed are often said to be the two emotions that drive stock markets.
Both are currently being experienced by many investors who have benefited
from the FTSE 100 index rising by more than 50pc during the past eight
months and even greater growth from emerging markets. Will next year see a
continuation of this year’s upward trend? Or will it more closely resemble
2008, when markets suffered shocking setbacks?
No prizes for guessing what the perennial pessimists think. Many are devoutly
wishing for sharp falls in share prices so they can get back into the game
and do something more interesting with their money than collect dismal
returns on deposits. My guess is that the relief rally has largely run its
course. There is only so far that share prices can …
Read the original article at Telegraph
