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  • Rev Shark:

    That Baggage Is of Your Own Making
    10/3/2005 8:07 AM EDT
    "You may have a fresh start any moment you choose, for this thing that we call 'failure' is not the falling down, but the staying down."

    -- Mary Pickford

    As we kick off the final quarter of 2005, it is a good time to reflect on one of the great things about the stock market: you can always get a fresh start. The only baggage that investors must continue to carry into the final three months of the year is that which they choose to not unload.

    Unlike most other endeavors, the stock market gives you a new beginning any time you want. All you need to do is dump your holdings and start fresh. As long as you haven't wiped out your capital, you are back in business and free to take whatever approach you desire.

    Investors often have a tendency to feel trapped in certain positions; they have nursed them for so long and through so many ups and downs that they can't bear the idea of letting go. It always feels like it's the wrong time to cut that sucker loose -- and as soon as you do, you just know that it will mark the multiyear bottom you knew was almost here.

    But your poor-performing positions not only hurt your returns; they can be very emotionally draining to hold. Day after day you contemplate those disappointing positions and you're forced to relegate them to a corner of your mind so you can focus your energies on more productive matters.

    As we kick off the last quarter of the year it is a good time to review your laggard stocks and contemplate dumping them. Don't just focus on how much you have invested in the stock financially and emotionally; think about how it will feel not to have that symbol on your screen, allowing you to explore new opportunities with the extra cash that will be freed up. It can be extremely liberating to finally let go of those stocks we consider "friends" but which have never treated us well. Even if your timing turns out to be off, the emotional energy that it gives you will help you find better opportunities elsewhere.

    Early indications for the start of the new quarter are positive. Some merger activity in Europe has improved the mood, but crude oil is trading up and Asian markets were lower on faltering confidence because of high energy prices.

    There was a lot of talk last week about window dressing. Some bulls argued that this is a healthy market and stocks are acting well for a reason, while the bears suppress a chuckle and say, "Yeah, right." One thing that is certain is that the bulls have their work cut out for them as we await the kickoff of earnings season. The news flow is not very positive and the technical picture of the major indices is problematic.

    As usual I'm distrustful of Monday morning strength and will stay skeptical of a positive open.

    Gary B. Smith:

     

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