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Bearish on the Nasdaq

The Wall Street Journal reports that short interest on the Nasdaq market has continued to climb this year – it’s been falling on the New York Stock Exchange. What does this mean? Simply that investors feel a downturn is coming, at least for many stocks traded on Nasdaq. I’m guessing that $60 a barrel oil probably has something to do with it, although I don’t quite see the connection on the surface.
Oh well – it’s not going to change my game plan at all. I’m a buy and hold type of investor. I ask myself “If I were to look at Company X today, would I feel like it’s a good investment at its current price?” If I answer No – I sell. Sometimes I buy more.
Case in point – I bought Brown Shoe Company (NYSE:BWS) in the upper 30s last year. Some bad news dropped it into the upper 20s. I felt like it was such a good investment at that price, I bought a bunch more. Now we’re back in the upper 30s (time to ask myself that question again, huh?).
Don’t ignore general sentiments – just don’t let them rule your life, either.
One other important thing to note is that we’re closing in on the end of fiscal year ’05 for a lot of mutual funds. This means there may be a lot of volatility in the marketplace this week as mutual fund managers reshift their holdings so that their end of year reports reflect portfolios that match the investment objectives set forth in their prospectuses. It’s all about the window dressing. So batten down the hatches and resist temptation to move unless you see a great bargain out there.

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