The NYSE had a major rally in the first quarter of 2012, and as history shows, stocks usually rally in April before selling off in May. Next week will be one of the busiest weeks of the quarterly earnings reporting period where 86 companies out of the S&P 500 will report. We’ll have companies like Microsoft ($MSFT), Verizon ($VZ), McDonald’s ($MCD), Johnson & Johnson ($JNJ), Coca-Cola ($KO), and General Electric ($GE) reporting, all of which I have in my portfolio. And then there will be some of the big banks like Goldman Sachs ($GS), Citigroup ($C), and Morgan Stanley ($MS) reporting. So far, reports from companies earlier have exceeded analysts’ expectations, so the week ahead should be something to look forward to.
If you’re new to investing, reading weekly or even monthly articles on the stock market can help provide clues to understanding its volatility, however, it’s critical to avoid getting too emotional during a large selloff, such as the one that happened last week, unless you’re thinking you might need your money out of the market really quickly. And if that’s the case, it is much safer to keep your money out of the market until you can safely afford a long–term position. There are a lot of investors who will wait on the sidelines during a rally (such as the one we’ve had so far in 2012) to buy when the market drops. When the market continues to rally, however, frustration starts to set in, and the passion to invest starts to diminish. As always, my thoughts on this are to find a few companies that you believe in, do a little bit of research, and then buy into the market somewhat blindly (yes – you can do this when you’re first getting started) without thinking of where your stocks have been or will be in the surrounding months. If you think long term, and you can set some goals for yourself to avoid panicking during large selloffs, it will usually be a safe bet. Afterall, the stock market is far less risky than gambling your money away in Vegas. 😉