I just came back from China and realized that my mailbox was flooded with mails from readers as well as from media. I received some emails even when I was in China.

There can only be two reasons for the sudden increase in correspondences – either a bull or a bear has engulfed the market. During a Bull Run, mails that I received are focused mainly on individual stocks as to whether those stocks are a good investment. On the other hand, readers tend to ask if they should cut loss on a particular stock when the market is falling.

Why do investors always buy high and sell low? It is true that high can be higher and low can be lower.

We tend to make the mistake of sitting out on a rally and jumping in when we realize that the stock that we are eyeing continues to move higher. Conversely, we tend to hold on when stocks are falling, cutting loss only when prices have hit rock bottom. These are the mistakes that retail investors continue to make year after year.

We must train ourselves not to buy high and sell low.

Firstly, we must learn to part with money in a more nonchalant manner because it is imperative that we take some risks when we invest in the stock market. We invest in the stock market because of greed, because we learnt that our friends and neighbors are making money from the stock market. Should we treat the stock market as a place where we invest our money or do we see it as an avenue to make fast money?

If we treat the stock market as a casino then we should be braver in our approach and not be so uptight about losses. If we were to lose our appetite and sleep over the stock market, then there is no point in holding on.

The money that we put in the stock market should be excess money that comes from our savings. It should not be our nest egg or daily expenses. If we were to lose the money, then we should treat it as money spent on a holiday, a handbag or a watch.

If you are a serious investor, then there should be a proper and methodical approach. What is the aim? Are we investing for retirement funds? We should all understand that fundamentally good stocks will give us good returns over a long period of time.

The bear market is a hard-to-endure phase and, thus, patience is required.

We are still a long way from the bottom in this bear market, but it does not mean that the market will keep on falling without a rebound. Every rebound is bound to attract greedy investors, who tend to get trapped in a bear market rally. The bear market will only end when investors no longer have the guts to buy into the stock market.

Looking at today’s situation, the US Dollar is still weak and interest rates will rise sooner or later. President Bush will be putting pressure on Ben Bernanke not to raise rates because the former does not want to be an unpopular figure.

If the US Federal Reserve does not raise rates, it would mean higher inflation and the Fed must choose between the two evils. The Fed has hinted that interest rates will soon go up, which has helped to prop up the US Dollar. How long can words without action help the Greenback? The Americans spent a bomb on the Iraq war, resulting in huge debt hence it is not easy to prop up the US Dollar.

We will get a new US President in November, and this guy has to deal with Iraq, interest rate policy and inflation, etc. I was hoping that Hillary Clinton will beat Barrack Obama because her husband has the credential of being the first post-war President to chalk up a budget surplus during his tenure. I am unable to access the potential of the two candidates and, thus, I prefer to stay conservative.