By James Woolley
At the time of writing we are coming to the end of the first quarter of 2011, and it appears as if investors are finding it difficult right now. You only have to visit some of the investing forums to see evidence of this. So why is 2011 proving to be such a challenging year for investors so far?
Well for a start there is the obvious fact that the markets are trading lower than they were earlier in the year. This means that most mid and large cap stocks will have fallen in line with the overall markets. Plus it has also been the case that many smaller stocks have fallen quite a lot as well, which doesn’t always happen.
There will be a lot of traders and investors who will have minimized their losses by using tight stop losses or selling most, if not all of their stocks at the first sign of a downturn. There will be others who are in it for the long run and continue to hold good quality growth stocks despite the recent downturn. However many investors will have banked a few losses or seen their overall portfolio take a hit.
The fact is that you really get to separate the really good investors from the average or poor ones whenever the overall market falls. Anybody can make money in a bull market when most stocks keep on rising because you could be invested in pretty much any mid or large stock and still make decent amounts of money.
However I have noticed that a lot of pretty good investors have not fared too well in 2011. This is most probably because there is an awful lot of unrest around the world at the moment. We have had the Japanese tsunami which has caused major problems in Japan, and there are the obvious problems in Libya and a few other middle eastern countries. All of which makes it very difficult to predict where the markets are headed.
Before all these problems there was an optimistic feel about the markets. Companies were reporting much better earnings and the major economies were starting to look a lot better. However these unforeseeable events have certainly dented this optimism and we now find ourselves at the mercy of world events to a large extent.
So it is easy to see why 2011 has been such a difficult year to make money for many stock market investors. It is not going to get any easier either in my opinion because even if the markets do not fall very much from now on, we are still heavily influenced by events around the world, and unfortunately no-one can possibly predict how they will turn out at this precise moment.
About the Author
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