Not Choosing Individual Stocks in This Market?

For some time now, I noticed that I haven't been blogging about individual stocks. The market has been bad, and I didn't think the time was right to start going for stock home runs.

Then yesterday, on the CNBC show Mad Money, Jim Cramer says something very similar, that he is not recommending many stocks in this market because the market is very bad.

Thank you Jim Cramer for echoing my thoughts exactly.

There is a common market saying that a rising tide lifts all boats. The same thing can be said about the opposite of that saying.

Some reminders:

1. Your 401k money is long term money (assuming you have many years or decades before you have to take money out.) If you have a diversified set of broad based ETFs or mutual funds, you can ride out this market. Continue to put money in your 401k and continue to accumulate.
   
2. In your discretionary fund, are you taking too much risk?
   
3. Do you have high interest rate consumer or credit card debt? Consider paying it off.
   
4. Do you have a 3-6 month emergency cash fund in conservative investments?
   
5. If you think there is a housing bottom within five years, and you intend to buy a house with money from your discretionary portfolio, then maybe you can take some money out and put the money in more conservative investments (high yielding online savings account, for example.)
   
6. Don't forget about controlling your losses.
   

I intend to create a new blog entry commenting on today's monster rally in the US Stock Market.

Do Not Marry Your Stock, Control your Losses, Lessons from SIRF, GPS Chip Maker

Today, GPS Chip Maker SIRF Technologies (SIRF) dropped over 50% in value. They reported bad earnings, and bad guidance. SIRF says there is demand for GPS chips, but pricing has gone down over the last year, putting strain on SIRF.

There is weakness in the Personal Navigation Device Market, but in the future, GPS chips in the wireless handsets are going to be a big growth area.

Despite this long term bullishness, investors should still be careful about individual cases in the GPS area, and investors still have to control their losses. SIRF and Garmin (GRMN), another company in the Global Positioning arena, have been going down big percentages in the weeks prior, and if an investor had the discipline to sell, that investor would have saved themselves from much larger losses.

Even with long term bullish trends, you still have to control losses in individual stock positions!