A swing trader who manages assets that are subject to volatile, exuberant swings in price is referred to as a “swinging” trader.
The term was first coined by Warren Buffett, the founder and owner of Berkshire Hathaway Inc., in his 1989 business advice, which referred to himself as a “swinging” trader. Buffett’s quote is a reference to the idea that “switching from one asset class to another is like ‘switching from one kind of candy to another.’ ”
Analyst’s call on the market: Stagnating returns
Analysts and financial experts use the term “switching” to refer to how they think the current value of an asset class changes with that asset’s price, rather than the overall performance of the market over the past 12-months, as a whole.
“It’s the fact that the stock market has made some terrible mistakes,” according to David Kostin, managing director at the Stash Foundation, an investment management firm in San Francisco, who said there is not much “worrying” about the current economic woes in the current stock market.
“When the market is up 15 percent for six months out of the year, the assumption is that it’s up 10 percent all year, plus or minus 5 percent,” he said. “So when you are in the markets, you are just guessing what’s going to happen.”
A typical swing trader can make hundreds of thousands, sometimes tens of millions, of dollars a year, according to Kostin.
Stocks have done poorly in 2012, but there are concerns the market can be about to get much worse, which could make stocks look much cheaper, said Tim Howard, an analyst at Oppenheimer Funds in Washington.
“I think we are just seeing the start of a correction in the markets,” he said. “It’s going to be a gradual correction, where we could very easily go through a downturn this year, then the market will rebound, because the fundamentals are in place.”
Kostin, Howard and others think the economy is just likely to improve over the next few months.
However, they noted that the global economy is expected to have only an 80 percent chance of improving in 2013, according to the global forecast released Wednesday by the Federal Reserve on its website.
“That means if we do come through here with an improvement, it’s going to be a gradual, modest improvement,” Kostin said
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