Let the Market Action Take its Course

You know you’re in a tough stock market environment when the only catalyst that can get the main market averages to rally (even just for a day) is the Federal Reserve saying that interest-rate relief is on the way.

It’s just my opinion, but I’m one of those people who think that a correction is a useful thing to have happen. Let’s get all the bad news washed out of the system as fast as possible and let’s get focused on the future — a more positive future.

Some of my colleagues are mad at the central bank for not acting sooner and stronger on interest rate policy. Central bank monetary policy is always between a rock and a hard place. It can’t please everyone as it tries to stimulate economic growth and not create inflation.

Policymakers have a lot to do this year. We could see a significant decrease in interest rates over the coming months and this will provide a lot of stimulus to the economy.

In my view, the stock market is a system that can correct itself very quickly, but you can’t ask the real estate market to act in the same manner. When you consider how strong the housing boom was over the last six years, it’s not unrealistic for it to take a year or two for prices to correct themselves.

Once the real estate market is back on track, then it will be smooth sailing for the economy and the stock market. In the interim, if you’re a stock market speculator, the amount of speculative investment opportunities will be reduced, but they will still be there.

It’s very easy to let prevailing investor psychology get you down. At the end of the day, however, there isn’t anything you can do about it. All you can do it stick to your guns and ride it out.