There’s early. And then there’s too early.

Early is buying Apple (AAPL) on October 6, 2008 at $98.14 and having to wait until March 2009—six months–before the stock moves up. And up. And up. On March 6, 2009 Apple closed at $85.30. A year later on March 5, 2010 the shares sold for $218.95. 

Early is happy.

Too early is buying home builder DR Horton (DHI) in July 2009. You thought long and hard before you moved. You didn’t buy on the first bottom in the summer of 2008 or even in early July 2009. You wanted to see signs the sector had bottomed and started to recover. The end of July rally seemed to promise that and so you bought at $11.17 on July 29, 2009. Now it’s February 18, 2011 and the shares trade at $12.77. The 14% gain doesn’t seem paltry until you remember that it’s your gain over 18 months. And that DH Horton shares still haven’t actually taken off as you’d hoped.

Too early is disappointed.

And it can be even worse—if you decide you can’t wait any longer and just have to sell. Then there’s a good chance that you’ve spent months sitting on dead money before taking a loss.

It’s clear why we buy early—we want to get a bargain price before everyone else piles on. And it’s clear why we buy too early. We don’t want to pass up a bargain—and lose our chance—so we jump in too soon.

Are there any rules that might separate the “early” from the “too early” and let us maximize our investing happiness and minimize our investing disappointments? Read more

Yes, stocks are rotating away from risk but does it mean anything?

On the surface the stock market isn’t going anywhere. The choppy daily action hardly moves the Standard & Poor’s 500 Index in a narrow range between 1088 and 1100. A “strong” rally like that of December 11 moves the index 4 points or 0.37%.

But beneath the surface the market continues its rotation away from the energy and financial sectors that led the rally until October. And toward healthcare, which started to move ahead in October, and utilities and telecom, which joined the leadership in November.

So what is the stock market trying to tell us? Read more