Time of release: 01/20/2012 12:00 GMT, 7:00 EST

Primary Pair Impact: USDCAD

Expected: 2.7%

Previous: 2.9%

DailyFX Forecast: 2.5% to 2.8%

Why Is This Event Important:

Consumer prices in Canada are expected to increase at an annualized 2.7% in December, and the slower rate of inflation could spark a bearish reaction in the loonie as the development dampens expectations for higher interest rates. As the Bank of Canada maintains a cautious outlook for the economy, easing price pressures may encourage the central bank to endorse a neutral tone for monetary policy, and Governor Mark Carney may keep the benchmark interest rate at 1.00% throughout 2012 in an effort to stem the downside risks for the economy. However, the stickiness in the core rate of inflation could prop up the Canadian dollar as the central bank concludes its easing cycle, and the BoC may talk up speculation for higher borrowing costs as policy makers expect the economic recovery to gradually gather pace over the coming months.

Recent Economic Developments

The Upside

The Downside

Elevated input costs paired with the rise in private sector consumption may encourage businesses to pass on higher costs onto consumers, and an above-forecast inflation reading could produce a test of former resistance, which lies around parity. However, as firms scale back their outlook for future sales, businesses may keep a lid on consumer prices, and a soft inflation report could drag on the Canadian dollar as interest rate expectations deteriorate. In turn, we may see the USD/CAD give back the decline from earlier this week, and the exchange rate may continue to pare the sharp selloff from December (1.0414) as the development dampens the scope of seeing a rate hike this year.

Potential Price Targets For The Release

How To Trade This Event Risk

Although we’re expecting to see a drop in the headline reading for inflation, an uptick in the core CPI could pave the way for a long Canadian dollar trade as it fuels speculation for higher borrowing costs. Therefore, if we get an in-line print paired with a higher core rate, we will need a red, five-minute candle following the report to establish a sell entry on two-lots of USD/CAD. Once these conditions are met, we will place the initial stop at the nearby swing high or a reasonable distance from the entry, and this risk will generate our first objective. The second target will be based on discretion, and we will move the stop on the second lot to cost once the first trade reaches its mark in order to preserve our profits.

In contrast, the slowing recovery in Canada paired with the weakening outlook for private consumption may ultimately lead to a soft inflation report, and a weaker-than-expected print is should drag on the exchange rate as interest rate expectations deteriorate. As a result, if both of the annualized figures fall short of forecast, we will carry out the same setup for a long dollar-loonie trade as the short position mentioned above, just in the opposite direction.

Impact that the Canada Consumer Price report has had on CAD during the last month

November 2011 Canada Consumer Price Index

The headline reading for Canadian inflation held steady at 2.9% for the second consecutive month in November, while core consumer prices crossed the wires at 2.1% amid forecasts for a 2.2% print. A deeper look at the reported revealed a 1.8% drop in energy prices, with prices for clothing and shoes contracting 3.1%, while the cost for food increased 0.9% during the month to mark the first rise since July. As the slowing recovery in Canada dampens the outlook for inflation, the Bank of Canada may preserve a wait-and-see approach in 2012, but the central bank may see scope to gradually normalize monetary policy over the medium-term as the region benefits from the more robust recovery in the United States – the region’s largest trading partner. Indeed, market participants showed a fairly muted reaction to the in-line print, with the USD/CAD holding above 1.0300, but the loonie gained ground during the North American trade as the exchange rate ended the day at 1.0294.

source form: dailyfx

While at this point it is still way too early to make any serious calls, we have been projecting relative underperformance in the commodity currencies over the coming months as the fallout from the global recession spreads. Our view from the start of the recession has always been a 3 phase recession view which originated in the United States, spread to Europe, and will soon move on to China, the commodity bloc economies and emerging markets. Although these phase three economies have slowed in the face of the US and Eurozone slowdowns, in our opinion, the intensity of the recession has not been fully realized in these regions. As such, we project relative underperformance in these economies even against the Eurozone going forward and look for crosses that have recently posted multi-year and record lows, like EUR/AUD and EUR/NZD to soon aggressively reverse course.

Data out of China has been less and less encouraging of late, while both Australia and New Zealand produced some extremely discouraging economic data this week, with terrible employment and much softer CPI respectively. With markets, it is also always about what has been priced in and what has not been priced in rather than what actually is at present. We believe that as bad as things are in the Eurozone, there is very little room for additional downside as most of the bad has been priced in, while in Australian and New Zealand, there is still a good deal of downside risk that has not been appropriately priced into markets.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD: The market has finally managed to find some bids and although the broader underlying trend remains intensely bearish, the risks from here are for additional corrective gains back towards the 50 and 100-Day SMAs in the 1.3100-1.3400 area before the next lower top carves out. Some falling trend-line resistance has already been broken on the daily chart and the 10-Day SMA looks to be on the verge of crossing back above the 20-Day SMA to provide added confirmation for short-term bullish structural shift. Setbacks should now be well supported ahead of 1.2750, while only back under 1.2620 negates short-term bull bias.

USD/JPY:Despite the latest pullbacks, we continue to hold onto our constructive outlook while the market holds above 76.55 on a daily close basis. We believe that any setbacks from here should be limited in favor of a fresh upside extension back towards 79.55 over the coming weeks. Look for a break above 78.30 to confirm and accelerate, while only a daily close below 76.55 negates and gives reason for pause.

GBP/USD: The market has mostly been locked in some sideways chop over the past few weeks with any rallies very well capped ahead of 1.5800 and setbacks supported on dips below 1.5300. Until either side is convincingly broken, we would expect to see additional range trade. Therefore the preferred strategy is to look to buy range dips and sell by range highs. Only a weekly close above 1.5800 or below 1.5250 would give reason for outlook shift.

USD/CHF: Although our overall outlook remains intensely bullish, the market is in the process of some interday consolidation before the next major upside extension beyond 0.9600 and towards parity. As such, from here, we see risks for additional setbacks towards 100-Day SMA by 0.9100 from where a fresh higher low is sought out. Ultimately, only a sustained break back under 0.9000 would negate constructive outlook and give reason for pause. Dips towards the psychological barrier should therefore be used as formidable buy opportunities.

source form: dailyfx

U.S Housing Starts Fell by 4.1%

According to a recent report, privately owned Housing starts fell in by 4.1%; nevertheless, the annual rate for December 2011 was 24.9% above the December 2010.

As I have sited in the pasts, there is a supposed lagged (by one day) and negative relationbetween the development in housing starts and gold; i.e. as Housing starts annual rates falls, gold tends to increase the following day. If this relation will hold up then we should expect gold to rally today.

Forex / Gold & Silver– January

The Euro/USD rose again for the third straight day, yesterday by 0.82% to reach 1.2863; currently itseems that the debt auctions of France and Spain went well, as they have sold their bonds at a lower yields than anticipated. Therefore, if the Euro will further appreciate against the USD it may help rally gold and silver.

U.S. Treasuries / Gold & Silver– January

In recent months there seems to be positive linear correlations between the daily percent changes of U.S. 10 year notes yield and precious metals (during January, the linear correlations for 10 year note yields and gold and silver is 0.55 and 0.634, respectively). If the LT U.S. treasury yield will continue to rise, it may also indicate that gold and silver will tend to increase.

Gold and Silver Outlook

Gold and silver changed direction and slightly fell yesterday, but their general trend in January is still upward. The ongoing rally of the Euro against the USD will continue to affect commodities trading and may trade up gold and silver during the day. Finally, the upcoming U.S. existing home sales might affect the direction of gold and silver as I have presented in the past.

source form: dailyfx

Total sales rose 1.1% on a year ago in February, against January’s increase of 4.2%, the weakest growth since May 2009.

Food sales rose 1.0% on a three month like-for-like year-on-year basis in the three months to February, down from a 1.4% increase seen in the three months through January.

Overall like-for-like sales rose 0.5% in the three months through February 2011 year on year compared with 0.8% in the three months through January 2011.

The BRC said that weakness had been most chronic in the non-food sector:

“Even online, the growth in sales of non-food items slowed to an 18-month low, Robertson said.

“Customers are cautious and cutting back in a big way on non-essential spending.”

Robertson also said that the “growth of online sales of non-food goods continues to outstrip the performance of store sales as more customers do more shopping via the internet but, over the short term, online is affected by many of the same factors undermining store sales.”

Helen Dickinson, Head of Retail at KPMG, said: “February was a continuation of the trend seen in the latter part of January, with struggling non-food sales highlighting consumers’ caution over the outlook. Food performed better than the previous month, boosting the overall results slightly but furniture, home and women’s clothing all had a poor month”.

“Apart from a bit of help from half-term for some retailers, February’s sales were weak,” Stephen Robertson, Director General, said.

“After the big boost to January’s figures from one-off factors, including a strong final burst of pre-VAT rise spending, February’s figures are a return to a more realistic picture of how things are for customers and retailers”.

source from: forex trading

While house prices continued to fall throughout the rest of the country, prices actually rose in the capital in February, according to the latest RICS survey.

A positive balance of 14 per cent of surveyors reported jumps in London house prices, compared to negative balances in all other regions.

The south east was the least negative, with 16 per cent more surveyors reporting a decline in prices than a rise.

“Broad trends in the survey indicate an increasing variation in the housing market across the UK with London and to a lesser extent the south east operating in a very different orbit,” said RICS spokesperson Jeremy Leaf.

Wales (-58 per cent) and Yorkshire and Humberside (-51 per cent) were the worst performing regions.

London was also the only region to report positive price expectations for the next three months.

And new buyer enquiries were up strongly in the capital, well above the national average. Only Scotland recorded a larger increase in new enquiries for house purchases in February.

Across the UK, 26 per cent more surveyors said that prices fell in February, compared to those who said prices rose.

However, despite house prices continuing to drop nationally, there were signs that the market may be about to bottom out.

A majority – 56 per cent – of respondents have reported prices as level for two months in a row, according to the section of data that is not adjusted for seasonal variations. And less than a third, 32 per cent, of surveyors reported lower prices in February – down from 50 per cent in December.

source from: forex trading

“The current range is a completely reasonable range acknowledged by the international community,” Chen Deming told reporters at a press briefing during the nation’s annual parliamentary session.

“It is completely unreasonable to use the trade situation as a pretext to require the yuan to appreciate by large margins.”

Critics claim the yuan is hugely undervalued, giving Chinese exporters an unfair trade advantage by making their goods artificially cheap.

But China’s Premier Wen Jiabao recently countered this, saying a sharp rise in the yuan would be bad for the country, bankrupting businesses and leaving workers jobless.

Chen on Monday said the yuan would gradually appreciate over the long term. It rose to a record high against the US dollar late Monday, according to Dow Jones Newswires.

source from: forex trading

US light crude rose by $1.95 to $106.75 a barrel, the highest since September 2008, before falling back sharply.

Brent crude gained $2.43 to $118.4, close to recent highs, before it also slipped back.

The latest price spike follows reported air strikes near the oil terminal at Ras Lanuf, which finds itself on the front line of military conflict.

The opposition ruling council in Libya warned on Monday that they feared Muammar Gaddafi would soon bomb oil facilities in his attempt to retake control of the east of the country.

Edgy stock markets

Meanwhile, European stock markets in London, France and Germany closed very slightly down, although Wall Street opened higher.

However, Asian stock markets saw selling earlier in the day on fears rising energy prices could derail the global recovery, with the Nikkei ending the day 1.8% lower, and Sydney and Bombay down 1.3% each.

An exception was the Shanghai Composite index, which ended the day 1.8% higher, largely due to a surge in the value of energy companies, including a 10% jump in China Shenhua Energy Company.

West Texas Intermediate Crude Oil Futures $/barrel

LAST UPDATED AT 08 MAR 2011, 11:30 GMT*CHART SHOWS LOCAL TIME

price	change	%
105.27	- -0.13	- -0.12

Middle Eastern markets remained stable, with the Saudi stock market rallying 3.1% in late trading on Monday.

The Tadawul All Share Index had been down 21% since the beginning of troubles in Libya last Wednesday, but it has since recovered and is now only 10% down.

There have been calls online for a “day of rage” in the critical oil producer this Friday.

Meanwhile, shares in Oman – which has also witnessed violent clashes with protesters in recent days – ended the day 1.8% lower.

Fear factor

The US has indicated that it is considering tapping its oil reserves as one way to help ease soaring prices.

But even that news failed to calm the markets as investors remained jittery about the unrest spreading to other oil-producing nations.

“The concern is that with what we are seeing in Libya, it’s purely fear driving the market,” said Jonathan Barratt of Commodity Broking Services.

“Each time the price moves up a little, people are forced into the market. Once it’s feeding itself, it will continue to rise,” he added.

Mr Barratt said US crude prices could peak at $120 a barrel, even if further supply disruptions do not take place.

source from: forex trading

The longer I live, the more I believe that’s true. Running the Derby of Economic Forecasting Talent (DEFT for short) reinforces my conviction.

I salute the contest’s winners, of course, though certain patterns over the years strengthen my skepticism about successfully predicting economic performance. Amateurs frequently beat professionals. No one wins consistently. Almost everyone misses the big surprise moves.

In this game, the contestants attempt to predict six key elements of the U.S. economy approximately one year in advance. They estimate gross domestic product, inflation, interest rates, the price of oil, retail sales and unemployment.

Cornelius Doherty, a retired surgeon from San Francisco, won first place in the contest this year, by nailing the price of oil with near pinpoint accuracy. A year ago, he guessed that a barrel of oil would cost $92.10 on Jan. 31, 2011. The actual price: $92.19. Most entrants guessed too low.

The economy will “continue to improve slowly,” helped by the Federal Reserve’s “massive” expansion of the money supply, Doherty said. Saudi Arabia will expand oil production to fund increased benefits for its population and head off social unrest, he said.

The contest drew a record field of 249 entries. Stockbrokers and investment managers were well represented and housewives, corporate executives and engineers also entered. For some reason, few economists dared to enter.

Runners Up

Bill Wilen, a retired professor of education from Kent, Ohio, and Geoff Townsend, a full-time investor for his own account in Toronto, Canada, tied for second and third place. Both of them came within an inch of guessing the inflation rate as measured by the Consumer Price Index.

The 12-month increase in the index as of Jan. 31 was 1.66 percent. Wilen and Townsend guessed 1.7 percent. On this variable, most people’s estimates were too high.

Wilen expects “moderate, slow improvement” in the economy. He is worried, however, that rising oil prices will be a “clinker” that slows down the economy.

Townsend is more pessimistic, saying he “wouldn’t be surprised if we have another recession” in the U.S. and Canada. “People are taxed out,” he says, “and the stimulus measures will be ending.”

Honorable Mention

I give an Honorable Mention to Steve Williams, a consulting engineer in Grand Rapids,Michigan. He was the only contestant to win or share a prize in more than one category.

Williams tied for second (with five others) in estimating oil prices, and tied for first (with 10 others) in predicting the U.S. unemployment rate.

He anticipates “gradual improvement” in the economy during 2011 because “our industrial clients are beginning to make improvements to plants.” He doesn’t expect a great year, though, reasoning that the U.S. government deficit and high oil prices will act as “drags.”

You, too, can try out your skill — or luck — as an economic seer. To enter the 2011-2012 Derby of Economic Forecasting Talent, just follow these simple rules.

Provide your full name, occupation and phone number.

Answer the six questions below.

E-mail your response to me at jdorfman@thunderstormcapital.com by no later than 12:01 a.m. EST on March 15.

Here are the questions:

Question 1: Economic growth. U.S. gross domestic product in the fourth quarter of 2010 was growing at an annualized rate of 2.8 percent. What will be the pace of economic growth in the fourth quarter of 2011?

Question 2: Inflation. The U.S. Consumer Price Index was rising at a 1.66 percent annual pace as of Jan. 31. What will be the inflation rate — as measured by the change in the CPI –for calendar year 2011?

Question 3: Interest rates. The interest rate on 10-year bonds issued by the U.S. Treasury stands at about 3.49 percent. What will be the interest rate on this benchmark bond as of Dec. 31, 2011?

Question 4: Oil prices. A barrel of West Texas Intermediate crude oil currently trades at a spot price of about $104, up about $20 in the past two weeks due to Mideast turmoil. What will be the price of oil when this year ends?

Question 5: Retail sales. U.S. retail stores rang up almost $382 billion in sales in January, up from about $380 billion in December. What will total U.S. retail sales be in the month of December 2011?

Question 6: Unemployment. Unemployment currently stands at 8.9 percent, down from a recessionary high of 10.1 percent in October 2009. What will the unemployment rate be at year-end?

To score the contest, I award three points for taking first place in any category, two points for second and one for third. In case of ties, which were numerous this year, the points are split, but a total of six points is always awarded for each category.

I will attempt to acknowledge all entries; please be patient. If you haven’t received acknowledgment within a week, feel free to e-mail me again.

Entries without a phone number will be disqualified.

The winner of the contest will receive a trophy from me, plus bragging rights of course. The second and third place finishers receive no prize, only glory.

John Dorfman, chairman of Thunderstorm Capital in Boston, is a columnist for Bloomberg News. The opinions expressed are his own. His firm or clients may own or trade securities discussed in this column.)

source from: forex trading

Will Rogers is quoted as saying “More important than the Return on your Investment is the Return of your Investment.”

To me that means you should diligently safeguard all your online investing account details and ensure you have a robust plan to achieve this.

The Bad Guys are Clever

The longer you’ve been on the internet the more it becomes an integral part of your life. It provides services that save you time, effort and hassle. It becomes your shopping plaza, your bank, your social calendar and many other useful things.

Of course to do this you have to ensure that the services you use are protected so that your details are known only to you. As you encounter more and more sites that require you to create an account with a user name and password the more you’re inclined to grow weary and end up by using the same details for each site you visit.

You convince yourself that life is easier that way. Unfortunately you are playing right into the hands of online crooks who use a myriad of ways to entice you to give up your information. You may even be caught out without realising it until its too late and the damage is done.

And of course there’s always the chance that hackers find there way into a database where your details are stored. Without you even knowing it your details are compromised.

Trust Nobody

So what should you do to make sure that you keep your account details secure? Firstly always be suspicious especially when visiting a new site on the internet.

If you have accounts at several online investing programmes make sure that the details you use for username and password are always unique. This way if your information is somehow compromised on one site then it won’t be able to be used against you on others.

Don’t forget that we humans are creatures of habit so if a crook finds your details on one online investment programme they are likely to test other similar programmes as there is a good chance you might have invested there as well.

Simple Strategies to adopt

It should go without saying that whatever method you choose to create user names and passwords you need to keep a record.

SIDEBAR: If your memory is anything like mine you can’t remember where you parked the car half an hour ago let alone what user name and password you are using on a site you visited three months ago.

If you are just a little creative with user names you’ll not only create new ones but they can also be used to remember when you joined. Let’s assume your name is Mike and you join a new online investment programme on 01 December. To help you protect your details and at the same time remember when the account was created you could use a user name like mi01ke12 (I’m using the UK date format).

For passwords something more sophisticated is needed. This is where it pays to do some online research and find a software tool that does all the hard work for you. You must create strong unique passwords for any online investment programme you belong to.

Free programmes that have received great reviews are:

1. Roboform
2. Keepass (the one I use)
3. Access Manager

I’d recommend you take each one for a test drive to see which one you feel most comfortable using.SIDEBAR: Don’t forget to change passwords regularly to provide an added degree of protection

Adopting these simple strategies will ensure that you can protect your valuable information easily and keep the bad guys at bay

Source:ezinearticles.com

Markets may have rebounded in 2009, but individual investors are still edgy and shell-shocked.

Even as the broad Standard & Poor’s 500-stock index remained up 56% since March, the U.S. unemployment rate crept above 10%, according to a Labor Dept. report released Nov. 6. “I don’t think many people are feeling very relieved,” says Milo Benningfield of Benningfield Financial Advisors in San Francisco. Many people believe the “[stock market rally] can’t last,” he says.

These remain risky times, and the last few years have demonstrated to investors the high cost of doing the wrong thing. Against that nervous backdrop, BusinessWeek asked financial advisers what common mistakes investors are making, and how to avoid them:

1. Don’t Jump In All at Once
A little optimism can be a dangerous thing. Individual investors are notorious for selling stocks when markets have already dropped and buying after they have risen. And, says Susan Elser of Elser Financial Planning in Indianapolis, “Selling low and buying high is the worst thing you can do for your returns.”

Among those who stayed away from stocks and other risky investments for the past year, many are irked to have missed out on the recent rally. But is now the right time to buy again?

Don’t rush back into the market because you worry you’ve missed the rally. “The biggest mistake is [to try] to make everything up at once,” says Micah Porter, president of the Minerva Planning Group in Atlanta.

At these levels, a 10%, 15%, or 20% correction in the stock market is entirely possible at almost any time. So, instead of buying all at once, Porter advises buying stocks gradually over the next year—or, if you have a lot to invest, an even longer time frame. That puts you in the market long-term, but minimizes the chances you’ll buy at the market’s exact peak.

2. Don’t Fall for Fads or Hype
In investing, jumping on the bandwagon is often a bad idea.

For example, television ads have appeared touting gold as an investment after the precious metal’s price has jumped higher, approaching $1,100 per ounce on Nov. 6.

Yet this could be the very time when gold prices are at or near their peak. “This is probably the worst time in my opinion to pile into gold,” Benningfield says. He also warns against currency speculation, another recent fad. “It’s really risky,” he says.

Along with other commodities, gold can be a valuable part of investment portfolios. But advisers like Steve Medland of TABR Capital Management in Orange, Calif., suggest keeping gold to less than 5% of your holdings.

Lots of marketing dollars are also pushing equity-indexed annuities these days. “It is the hot product of the day,” Elser says. But Elser, Medland, and others warn about the complexity and high fees of these annuities.

3. Don’t Use Headlines or Politics as Investing Guides
“Making [an investing] decision based on who is in political office, whether you agree or disagree, is a huge mistake,” says Elaine Scoggins, client experience director at Merriman, a Seattle-based investment advisory firm.

Since the election of Barack Obama as President, political temperatures on the right have risen (just as tempers rose among liberals during the last Administration). And that could be leading to bad investing decisions.

Based on their political beliefs, people are buying into disaster scenarios, from high inflation to a crash for the U.S. dollar to skyrocketing tax rates, Scoggins says. “There are a lot of scare tactics in the media and in politics.”

Betting your portfolio on these unlikely outcomes can be a big mistake.

“There’s incredible fear out there,” says Paul Sutherland, chief investment officer at FIM Group in Traverse City, Mich. But not all the fear is warranted. For example, he notes, a weaker dollar actually can help U.S. manufacturing or U.S. firms with overseas profits.

Politics and current events tend to spark emotions, which are a poor guide for long-term investing, Medland says. “What’s going on in the headlines doesn’t predict what is happening in the markets,” he says.

However, one political fact investors should be aware of is the likelihood of higher taxes for wealthier Americans. Though it’s hard to know when and how much rates will increase, good financial advice can help taxpayers minimize their tax bills in some cases. For example, Americans might take investment gains now, while capital gains rates are still relatively low.

4. Don’t Disregard Quality
Since March, the lowest-quality companies have had the best-performing stocks. Punished in the depths of the financial crisis, they have rebounded on hopes of a recovery. For example, banks, industrial firms, or very small companies—i.e., risky firms highly influenced by the financial crisis and the recession—have seen their shares double or triple in price.

Meanwhile, companies with stable, consistent businesses have often languished in the stock market.

Don’t expect that trend to continue. In fact, the trend may have already ended.

Consider the firms that have done best over the last 12 months in boosting revenue. According to Capital IQ, the top 100 revenue-raisers in the S&P 500 are up a median of 50.3% since the March low, while the firms with the 100 worst 12-month sales-growth records have rocketed higher by a median of 96.7%.

In the last month, though, the performance between the two groups began evening out, and in the past week the trend has reversed entirely. In the first week of November, the median quality firm is up 0.6%, while the median worst firm is actually down 0.2%.

John Merrill, chief investment officer at Tanglewood Wealth Management, says the shift may be the result of a new kind of investor entering the market. These stock managers have been cautious for months, but now they believe they need to start buying. Still wary of risk, “They’re going to take the safest step into the market,” Merrill says.

Firms with strong fundamentals also can be more resilient long-term bets and may be selling at cheaper prices after the recent rally, Sutherland says. “There are a lot of quality companies selling at great prices,” he says.

The same may be true in the bond market. Porter warns against buying high-yielding junk bonds after an “incredible run” for the risky investments.

5. Don’t Forget What You Learned
The sudden drop in stocks in 2008 and early 2009 taught every investor what can go wrong. Financial experts say these lessons shouldn’t be forgotten, even amid a stock market rally.

“People should always be thinking about those worst-case scenarios,” says Medland. The biggest mistake in a crisis, he says, is to not have a plan in advance.

The crisis also taught investors something about themselves, about their ability to invest for the long-term without selling low and buying high.

If you panicked in March and sold all your stock, you’ve lost out on big gains. If you’re susceptible to such investing mistakes in times of crisis, maybe you should pursue a more conservative strategy, Elser says.

“People who jump in and out of the market probably shouldn’t be in the market,” Elser says. “You either have that tolerance for volatility or you don’t.”

For many investors, “one lesson is maybe they took on too much risk,” Benningfield says.

Against the backdrop of a tough job market, investors are desperate for returns from their investments. They’re still smarting from huge holes in their portfolio caused by the market meltdown. But it’s important to remember: If you lost big on risky investments in 2008 and early 2009, the solution is not to take on even more risk in an attempt to win back your losses.

Source:businessweek.com