Trend Investing Whip-Saw Reality

On August 8th, our MA200S trend signal for the German DAX index turned down. The MA200S is not a signal that we normally publish. However, since I am acting on it myself, I think I owe you this type of information for transparency reasons.


Yesterday after the big up-swing in European stock market indices, the MA200S for the DAX has turned up again. Thus next week, I will invest again in DAX related index funds.


This movement in the DAX and the MA200S trend signal is a typical example of whip-sawing.

This happens. The signal indicated that the long-term trend is moving down. And then the price action reverses and the signal turns back up again within a matter of weeks or months.


Looking back, you may come to the conclusion that it would have been better to hold on to your funds. By selling in August you would have forfeited some of the gains made by the index. But that is with hindsight.


Forfeiting sometimes some of the gains are the costs that we pay as trend investors for avoiding the long-term down turns and protecting our capital for these events.


Like always, contact me with any questions.

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