How to become a better investor ?

Valdimir Bajic

2 months ago

The next type of attack via the stock market will be to consistently trigger a stampede. At some point in time, 3600 to 4500 point moves in the Dow will become standard operating procedure. Market Update, April 30, 2021

This current pullback could end being the first time the above strategy is put into use. The Dow could shed between 7 to 11 per cent from its highs. Taking the midpoint, it would translate to a move to the 30,450 to 31,800 ranges. The Dow could shed up to 3,700 points on the high end, meaning the above strategy would be in play.

Before continuing, remember that the only thing to fear is fear itself when the trend is up. We have been through this before, and we came out mostly unscathed. Nothing, at least in the near foreseeable future, can compare to the COVID crash. Most importantly, we came out swinging hard. We banked massive gains due to the opportunity that the crash provided us.

What about the “it’s different” this time argument? Rubbish!! that is all we have to say to anyone coming up with that line. Look at the above chart. Can you even pinpoint the great depression or the so-called deadly crash of 1987? Every crash gave birth to a new baby bull. The key to banking vast sums of money is to always have some cash at hand and, most importantly, never over-commit funds to a single position. As long as the trend is on our side, we have to view every pullback through a bullish lens. If you are new or still allow your emotions to do the talking, then you best reread Aesop’s fables. No other book will help you get a better grip on investing than this simple book. Start off with the hare and the turtle. We have seen emotions running high on some threads, both in the Market Update and AI Trend trader forums.

To be a better investor: Think out of the box

We examined each of the 30 stocks via their respective monthly charts. Given the strong moves the market has experienced, logic would dictate that most of the Dow stocks would be trading in the overbought ranges. However, the results were somewhat surprising. Fifteen stocks were trading in the oversold ranges, and one stock was trading in the neutral range. So, 53% of the Dow components were either trading in the oversold or neutral ranges.

One could draw two conclusions from this observation:

The odds of the Dow experiencing a strong correction are lower than usual; instead of 10-15 per cent correction, it might pullback in the 5 to 9 per cent ranges
Or it continues to trend higher until over 70% of the stocks are trading in the overbought ranges. Still, specific sectors will experience sharp corrections, otherwise known as a silent correction.

The main piece of data to walk away from this analysis is that we have yet another confirmation that no matter how strongly the market corrects, it would make for a buying opportunity. As we have stated many times in the past, Tactical Investors should hope or even pray for a sharp pullback, for it’s akin to being given free money when the trend is up. Market Update, Feb 14, 2021

Random Information on becoming a better investor

The sit and wait stage break the average investor, especially those who assume their degrees, or high IQ, give them an edge in the markets. The acronym PhD stands for Doctor of Philosophy, but we have a better acronym at the Tactical Investor; permanent head damage. As that is what most PhDs suffer from, especially those originating from the field of economics. The only thing that helps when it comes to the market is to have an open mind and understand the basic principles of mass psychology. Technical analysis provides one with the ability to fine-tune entry points. Astute investors know that the most critical stage in the market is the sit and wait stage, otherwise known as the Patience and discipline stage. Overtrading leads to mediocre gains or loss but more importantly, the stress factor surges by 4X if not more. Factoring the extra stress and the damage it causes to one’s health nullifies any of these gains. Astute investors view health as their number one investment; everything else comes in at a very distant second.

Does it matter if you make money in the first four months or the last three months of the year? Those who understand this simple principle can generate 20% a year with almost no effort and very little stress and significantly more with a bit of work. In the end, health is the ultimate investment, lose your health, and even if you have a billion dollars, you are worse off than a beggar in good health. On the other hand, if you have optimum health and just 50k to 100K, you have the opportunity to turn that into a small fortune, but you are off to a good start as you still have your health