Tactical Investment Strategy: Follow The Trend & Ignore The Noise

Tactical Investment Strategy: Follow The Trend & Ignore The Noise

Tactical Investment Strategy

Our methodology is straightforward; we do not believe in extensive technical analysis or extensive time spent on fundamental analysis as history indicates that neither works well as standalone tools or even when combined. The best stand-alone tool that is hard to grasp because of its simplistic nature is Mass Psychology.

As we have stated on numerous occasions, if we were forced to choose only one tool, we would opt for mass psychology. As we do not have to make such a decision, we decided to combine custom TA tools that are easy to use with MP.  New subscribers might feel that we fire a plethora of new plays without doing any research; that would be far from the truth.

The Screening Process

First of all, we have a screening process and when the stock enters our ”buying list” each candidate is evaluated on a case by case basis. We also employ a strategy of deploying only a 1/3rd of our funds at a time and finally risk to reward models are used to determine entry points for each play.  We have never issued instructions to purchase a stock at the market price. Therefore, if you get into a position, you are establishing a position at a price that maximises the profit potential while minimising the risk factor.

Employing this tactic places a far more significant burden on our shoulders; in other words much more work. One will be hard pressed to find many services that follow this methodology;  it comes down to one reason only, most financial services only focus on the “money factor” but place little value on “ the customer satisfaction factor”. We are in business to build long-lasting relationships and more importantly, we believe in the adage “a job done poorly falls under the same category as a job that was never done”.

Our investment strategy is  Simple

  1. Spend some time getting used to our style
  2. Then follow the plays that appeal to you; we put out enough plays to suit everyone’s appetite. If you feel that you only want to play ETF’s; then feel free to do so. Do not over think the matter; make a decision and stick to a game plan. As you become used to the style, you can increase your exposure, start small and work your way up
  3. We do all the hard work; we focus on determining the trend and market sentiment. You only have to decide what play’s appeal to you.
  4. If there are stocks that you are interested in that are not covered in the portfolios, all you have to do is send us the stocks that interest you (please no more than four stocks at a time), and we will review them in the next update. To date, we know of no service that offers this feature for free to their subscribers

Investing Does not have to be hard

The average investor has been fooled into believing that investing is hard work. They have been conned into believing that they have to beat themselves into pouring over reams of useless data, but sadly this always leads to an equally useless outcome.  What you need to understand is that the game is rigged; you heard us correctly. The stock market is one massive casino where the odds are firmly in favour of the house.

However, the players are all emotional, and if you understand the emotion that’s driving the markets, you can spot the trend. To solve a problem one has to identify the problem correctly; now that the problem has been identified, the solution is easy.  Focus on the emotion, and you will spot the trend. Hence investing is not hard, what is hard is undoing all the nonsense you have been fed by so-called experts who on their best day could only qualify to be sanitation engineers ( sanitation engineer is just another elegant way of describing someone that works in the field of garbage management).

Focus on the trend

Never focus on the noise, focus on the trend; if these experts knew what they were talking about they would not have all called the so stock market crash that took place during the Nov-Dec 2018 period as an end of the world type event; they would have labelled it as a “buying opportunity”. Over 95% failed to do that, which proves that experts are just that EX SPURTS, a Spurt that never was and never will be; experts make for good toilet cleaners.

Random thoughts on Investing

Polarisation can be utilised to your advantage

From a psychological perspective, polarisation is a positive development as long as the trend is up.  When people are driven by emotions (especially people in power), they cannot think clearly, and their only ambition is to destroy their opponent. When one cannot think clearly, one is destined to lose the war; it is just a matter of time. Those that can remain calm in such periods usually stand to walk away with the most significant gains.   Individuals from both parties will be going for the jugular, and some of these attacks will temporarily shock the markets. At the Tactical Investor, we embrace shock type events (as long as the trend is up) and the stronger the deviation, the better the opportunity.

Never focus on the Fear Factor but on the Opportunity at hand

Therefore, do not focus on the fear factor, but try to direct your attention to the “opportunity factor” if another shock type event hits the markets. The trend is up and showing no signs of weakening. Therefore we must treat anything the media attempts to market as a disaster, as an opportunity factor. The media is an extension of the mass mindset. For any con, you need at least two elements, a con artist and a bunch of idiots.  An observer is not part of this equation for he/she does not equate with the conman or the idiot, the observers function is to observe, and then use the data to plot the most favourable path

Market Update Dec 26, 2018 

Finally, keep in mind that we have always advocated that crashes are nothing but long term buying opportunities.  Pull up a long term chart and you will be forced to arrive at the same conclusion.  The Big player’s game strategy is to get individuals to focus on words such as bear market, crash, and end of the world, etc.; in doing so, the crowd focuses on the tree and forgets the forest.

The correction of 2008 was warranted as the masses were euphoric in terms of the housing sector; it took a turn for the worse when Lehman brothers were purposely thrown to the curb by the Fed.  Regardless of this development, you can see that the markets were trading in the extremely overbought ranges and masses were euphoric.   The same sequence of events occurred during the dot.com bubble and the not too late Bitcoin bubble. If there were charts, we could demonstrate the exact setup going back all the way to the tulip bubble.  

The correction of 2018 is not warranted so the markets are going to reverse course.

Notes on Crashes and Sharp Pullbacks

There are two main underlying themes behind every single market crash; a euphoric crowd and an extremely overbought market. Both elements were missing this time around, clearly highlighting that something else is at play here, and it smells dangerously akin to market manipulation.  Market manipulation via weaponized news?

From a long-term perspective, this sharp pullback is creating another once in a lifetime buying opportunity event. The crash of 2008 was one of the most painful in recent history and yet despite this vicious pullback; the Dow is still trading well over 200% above its 2009 lows.

Another myth that is peddled over and over again is the issue of how long it takes a market to recoup it has lost gains. Our response is who cares? What matters is the stocks you are buying and not a particular market index. A vast number of stocks had already tacked on gains of several hundred percentage points before the Dow traded above its 2008 highs.  The same is going to happen this time around.  Strong companies will recoup their gains 2X to 3X faster than the broader markets, so when the Dow trades past 27K, some of these stocks will be showing gains in excess of 100%.

Other stories of Interest

Stock Market Crash Stories Experts Push Equate to Nonsense  (March 4)

Popular Media Lies To You: Don’t Listen To Experts As They Know Nothing  (March 3)

Fiat Money; The main driver behind boom & Bust Cycles  (March 1)

Permabear; It Takes A Special Kind Of Stupid To Be One  (Feb 21)

US Debt To GDP Means Nothing To Bonds & Stocks  (Feb 12)

Technology-Driven Deflation Will Kill The Inflation Monster (Feb 7)

Business Investment & Stock Market Uncertainty   (Jan 31)

Dow 30 Stocks; what are they saying about the markets  (Jan 30)

Stock Market Bull 2019; Follow The Trend & Avoid The Noise   (Jan 29)

Long Term Trends & Bull Market Bear Market Nonsense   (Jan 16)

Bull & Bear Market 2019: which one will prevail  (Jan 14)

Stock Market Crash-Media Lies And Ignorant Experts  (Jan 11)

Market Correction Vs A Back Breaking Market Correction (Jan 3)

Bitcoin Crash: Is Bitcoin Bull Dead Forever (Jan 1)