Beware of Short-Term Investment
Short Term Generally means one year or less, although some people extend the period of two years or less. You get the point.
Every person has short-term goals. Some are modest, such as setting aside money for vacation next month or paying for medical bills. Other short-term goals are more ambitious such as accruing funds for a down payment to purchase a new home within six months. Whatever the expense or purchase, you need a predictable accumulation cash soon. If this sounds like your situation, stay away from the stock market!
Because stock can be so unpredictable in the short term, they are a bad choice for short-term considerations. One of the people I know get a kick out of market analysts on television saying things such as “At $25 a share, XYW, is a solid investment, and we feels that its stock should hit our target price of $40 within six to nine months.” You know that an eager investor hears that and says “Gee why bother with 3 percent at the bank when this stock will rise by more than 50 percent? He better call his broker “It may hit that target amount or it may not. Most of the time, the stock doesn’t reach the target price, and the investor is disappointed. The stock could even go down! The reason that target price are frequently usually missed is that the analyst is one person and it’s difficult to figure out what millions of investors will do in the short-term. The short-term can be irrational because so many investors have so many reasons for buying and selling that it can be difficult to analyze. If you want to use the money you invest for an important short-term need, you could lose very important cash quicker than you think.
Short-term stock investing is very unpredictable. You can better serve your short-term goals with stable, interest-bearing investment.
During the raging-bull market of the late 1990s, investors watched as some high-profile stock went up 20 to 50 percent in a matter of months. Hey, who need a savings account earning a measly interest when stock grown like that! Of course when the bear market hit form 2000 to 2003 and those some stocks fell 50 to 85 percent a saving account earning a measly interest rate suddenly didn’t see so bad.
Stocks even the best one fluctuate in the short term. In negative environment, they can be very volatile. No one can accurately predict the price movement (unless you have some inside information like us Stockpreacher.com) so stocks are definitely inappropriate for any financial goal that you need to reach within one year.
Our recommendation is never invest stock market as a short term investment (especially on our penny stock picks). It is better treat as Intermediate-term goals and Long term goals.
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