Get Educated on Timing the Market for the Next Bull Market

Right now there is not too much Baby Boomers can do about their investments. If you are still fully invested in managed funds then the advice must be to sit tight on the equity fund investments unless there is a significant rally to sell into.

If you managed to pull some or all of your money out then cash is a position but not for ever like the buy and hold merchants would have you believe.

Put 3-5 years worth of cash into “safe” investments like bonds and term deposits so you can pay yourself in retirement. This is what the fund managers should have been doing slowly for you so as not to affect the markets adversely and protect your nest egg.

If you do not know what is going on in the markets then you need to stand aside until things become clearer. Most gurus and pundits tell you this. Guess what, it is market timing by any other name.

Just one look at the S&P 500 index will tell you the market is in a downtrend. You don’t need to be a Wall Street investment expert to see that. S&P 500 Down Trend

No one knows how long this market will last so what do you do now?

You educate yourself ready for the next Bull Market. It may not happen right away, but it will happen. Be ready.

You learn to read charts and understand the stages in the markets. Charting and technical analysis can help you get out of markets far quicker than a brokers recommendation to sell which is as rare as hens teeth.

The very people who are making the stock recommendations still work for companies paid by the markets. Chartists believe all events are factored into the market price on any given day.

You cannot trust CEO’s CFO’s Boards, Brokers, Congress, Presidents, Prime Ministers or anyone on Wall Street to tell you the truth. There are only two things you can rely on – PRICE and VOLUME. You will know both at the end of each trading day.

Understanding price and volume from a big picture investment viewpoint is relatively easy. Day trading is much harder if not impossible for most people. Your friendly financial adviser would disagree but until you take a look for yourself don’t believe them. Have confidence in your own ability and judgement. Trusting theirs has got us all into this mess.

When I started trading/investing in 1995 I found one book that gave me the overview I needed to start using charts and technical analysis to trade/invest successfully.

That book is by Stan Weinstein and is called, “Secrets for Profiting in Bull and Bear Markets“. I got three things from that book;Stage Analysis for Stocks

  • Stage Analysis – There is a time to enter or exit any market
  • Use of Stop Losses – Its okay to be wrong so when you are cut your losses fast.
  • Definitions of terms to use to analyse the markets.

You can find a good overview of Stan’s Stage Analysis at Share Hunter. I am not recommending Share Hunter but it does appear to implement Stan’s strategies.

Where do you think we are now in Stan’s Stage Analysis? It’s not that hard is it? So don’ let the financial advisers fool you into saying things are too difficult.

I don’t believe you should all go out and learn how to time the market as an investor (as opposed to a trader), unless you want to. What I am saying is learn to read charts and see trends. Know at what stage the markets are at. Understand how to use stops to protect your nest egg.

When your financial adviser tells you to keep investing and you can see the S&P is in Stage 3 or 4 give him a copy of Stan’s book to read and tell him to reduce your exposure to the equity markets.

Stage Analysis is not infallible. If you are wrong about stage 3 and you exit the markets, you still have all your money AND your profits. If you leave it until well into stage 4 you will repeat what has just happened to most Baby Boomers.

As a Baby Boomer you should not take unnecessary risks. You need to learn how to avoid large losses. Use this time of uncertainty wisely to educate yourself and don’t be a Wall Street victim again.

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