I'm not sure if you've had a chance to check out any of the material from Bill Poulos from Profits Run, but he's normally right on with his techniques and analysis...almost as good as Adam!! He's a big fan of the video education, as we are, and today I've asked him for a favor. That favor is to come and teach us a little about how we ride these markets more effectively...and allow us to watch his 6 part video series on how to become a more independent trader. The videos can be watched HERE.
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Today I wanted to bring to light a major shift that has occurred in the markets. One that isn't getting enough attention, but has the capacity to continue wrecking people's portfolios.
That shift is a movement away from traditional buy and hold investing and toward technical trading.
If you've watched the markets in recent weeks you already know that both the Dow and the S&P500 have traded in a very consistent but narrow range.
And, if you've been watching since late last fall when the markets suffered their worst fall since the Depression era, you would know that the people who are in control of their trading actions are the people less likely suffering from significant drawdowns. Conversely, those who adhered to long term investment strategies are looking at extreme timelines just to recover to a break even level.
Today I'd like to share with you where the shift is happening, and what you can do about it:
In the longer term investing model, money in the market would typically stay 'put' for several years (usually in the range of three to five years). That same money RIGHT NOW is moving in mere DAYS.
That suggests more traders using technical indicators to drive their actions in the market and fewer relying upon fundamental indicators. As well, the speed at which the market prices are moving dictates the need for AGILITY -- traders need to be doubly aware of their risk management practices and completely UNEMOTIONAL about executing them.
What you MUST do:
Get control right now of your portfolio by learning to become an INDEPENDENT trader.
I've found some individuals aren't prepared for this, because they're what I call "DEPENDENT" traders.
DEPENDENT traders rely entirely on the media to "spoon feed" them "market info" and "hot tips"... they still think holding on to a stock and praying for it to go up is the way to go... and they don't have a plan they can follow regardless of what the market does.
To help more traders get on the INDEPENDENT express, I recently re-released my 6-part COMPLIMENTARY video series which will help people to adapt and use a new approach to give them the flexibility required to prosper in today's markets.
I believe that right now is the time to attack the market, not run away from it. Even though the economy is in recession, you can prosper -- and in the complimentary video series, you'll learn 5 'recession-proof' trading attack plans you can execute RIGHT NOW to enhance ANY trading method at ANY time, in ANY market.
Watch the videos HERE
The bottom line, however, is simple: the markets have changed and those who adapt and change with the markets have the greater opportunity to prosper. Those who fail to adapt will likely be left behind.
Bill Poulos
I should clarify. I've been invested in gold and gold stocks since 1999. I'm invested in them right now and didn't sell during this recent downturn although I wish I took a little off the table six months ago. There is a lot of opportunity in these right now and I believe this sector will be the ONLY snorting bull market in town in 2009. That is agreed.
In my first post I was making reference to general equities. Waiting on the sidelines can be a very powerful move if you are in a bear market. Forget trying to trade if you're in a bear market.
For 10 years I've been using the Dow to Gold ratio model. It's not perfect but it's one page in the roadmap of other indicators. Many will laugh, but I'm looking for a dow to gold ratio of 1-1 or a indicator that it's reversed when it gets near it. So, right now I'm short the dow and long gold and if my plan works out I'll blow away any trader out there who tries to flip flop using trade triangles and bla bla bla.
IF the dow follows it's long valuation wave then we won't see an end to the bear market in general equities until circa 2016. Good luck to all. It's been a tough year.
Waiting on the sidlines is just plain dumb. You have to find what sectors are moving Up and then use the corresponding ETFs or drill down to find the underlying stocks to play the best sector trend.
Presently the Gold and Silver stocks have been strongly moving Up. You can chart the HUI Gold stock index and if you like it choose the best HUI componet stock or simply go with the Gold Stock ETF ( GDX ).
As an aside silver bullion and silver stocks are currently outperforming gold and gold stocks.
That's a funny comment! Just understand one thing - we are not entitled to an equity bull market! Look at Japan's stock market or Taiwan or Korea over the past years. There is no inherent reason that the next US bull market is around the corner. Read your history. 1966-1982 - look at the cumulative return on the DJIA. Best of luck - for the foreseeable future, the only when to make money in the financial markets will be thru trading!
All of us buy and hold guys recently got burned. That is true. I agree that volatility will increase. However I don't believe the market will trade sideways on volatility forever. Eventually, equities will turn up and we'll be back into a bull market and a buy and hold will do good. Or, they will continue to go down and we are currently nowhere near the bottom. The markets are in chaos right now. I think a person is better off waiting on the sidelines until sanity returns. And it will return.... someday.