Stock Investing 101

January of 2010 was a very busy month for the stock market. The stock market “January effect” usually occurs to at least some degree and GDP numbers came out! The 4th quarter was very good to the American economy, our gross domestic product was up 5.7% which is very good news and signals that our economy may be turning around.

There is not as much on tap for February of 2010 but that does not mean that this month is irrelevant by any means. There have been fears that the stock market will take another dip down before fully recovering. The day the GDP number came out, the stock market was actually down. This means we are either headed for another trip down to 4 digits on the Dow, or investors were expecting a very solid GDP number.

It is impossible to predict what the stock market will do in the short term, but I see February of this year, 2010, as a very important, perhaps even pivotal month for the market. If the stock market struggles and returns -3% for the month or worse, that would be an awful sign considering all of the positive economic data that has come out lately. That would mean that the stock market would need a “breather” before having another leg up or that the stock market might be taking another dive down.

It is important to invest year by year, decade by decade and not month by month or day by day. It is great to keep track of your investments and make sure everything is on the up and up but to not micromanage your portfolio. Wealth is not created in months, it is created over years and years of time.