Stock Trend Investing

Are you aware of all the advantages that trend investing offers to people like you and me? We have money to invest. But we do not have (or do not want to spend) a lot of time on studying boring quarterly financial reports.

 

We also know that you can loose a lot of money when you just buy and keep mutual funds. But what is the alternative?

 

In this article, we will share why we love trend investing. In summary, it is because of the following. Trend investing offers all of us the opportunity to capitalize on stock market trends and to start or continue our journey to financial independence without having to spend a lot of time on it. Let’s go into the different reason behind this.

 

Are you the general who has a sound stock market strategy and who is allocating its assets towards the winning direction? Or have you been more an explorer who has been searching and attempting many roads, consuming your assets to see if you can find one road that leads to El Dorado?

 

Explorers sometimes struck gold, if they are lucky. But most don’t. When I invest my savings, my assets, I do not want to be dependent on being lucky. I want to be like the general with a strategy who knows where to go and how to get there.

 

So, what is the best stock market strategy? This depends. I know what it is for me. But every person will have to decide what the best strategy is for them. Let’s have a look at what factors play a role in making this decision.

 

 

In your choice for the stock market strategy that fits you best, the following three factors are to be considered:

 

The first question to ask yourself is if the terrain of the stock market is actually a terrain that you want to enter. Do you know this terrain well enough to understand its pitfalls and do you recognize the natural advantages that this hilly terrain can offer?

 

The second question to ask yourself is how you want to enter this terrain. This has to do with the level of risk you can and want to accept and the resources you have. Do you want to put everything down to one move or do you want to spread your resources over multiple approaches? Do you have the time and relevant professional knowledge to plan and manage very detailed and complex operations, or do you want to keep your approach simple, straightforward and easy to control.

 

 

Thirdly, you ask yourself how much influence emotions like fear and greed have on you when the pressure is mounting and how you avoid to fall victim to them.

 

Stock Trend Investing is the stock market strategy that is best for me. The trends in the market are like the hills in a terrain. They offer the natural opportunity to make solid gains. Mutual funds and ETF’s offer the possibility to spread resources without having to spend too much time on getting detailed knowledge of individual companies. And the buy indications and sell warnings from the Stock Trend Investing system provide a framework to keep a check on fear and greed while still giving room for individual judgment.

 

What is the best stock market strategy for you and why is that? Please share your comments with us.

 

How can correct stock market timing give you a way much better investment result than just buy and hold? One basic investment strategy is to buy stocks and hold them for a long, long time. The rationale behind it is that if you look historically, stocks have made very good returns every year on average. Let’s take the Dow Jones index as an example.

 

The Dow Jones for example is up 267% over the last 20 years. This is thus an average annual compound increase of 6.7%. This means that if you would have invested 20 years ago 10,000 dollars in a Dow Jones index fund, this would have netted an average annual increase of 6.7% and resulted now in a stock holding with a total value of 36,700 dollars. This is excluding dividends.

 

However, take into account that the Dow Jones index closing for October 2009 is 30% lower than its highest all-time month closing of October 2007, 2 years ago, while still being up more than 37% compared to February 2009, 8 months ago. And consider that the Dow Jones index fell 34% between December 1999 and September 2002, while it increased again 83% between September 2002 and October 2007.

 

 

 

 

 

 

 

 

 

 

The point I want to make with all these figures is that any investor who started with a Dow Jones index fund 20 years ago and who realized that it was wise to sell in Q1 2000, buy in Q4 2002, sell in Q4 2007 and buy in Q2 2009, would have made way more money than an investor who just buys and holds.

 

The 10,000 dollars from 20 years ago would have become 72,000 dollars now, meaning an average annual increase of 10.4%. Compare this 72 thousand with the 36.7 thousand mentioned above and think which one you would prefer.

 

Thus to me the secret of stock market timing is to recognize when the big trend shifts happen. In hind-sight it is always easy by looking at a historic stock market chart. The important thing is to realize it at that time so that I can act on it. In that way I can capitalize on the stock market trends and continue my journey to financial independence.

 

 

Thus for me, it is not about every hour or day to see how the stock market is doing. The great thing about this is that it takes very little of my time. I do follow the news, but only once after each month I make a decision if it is time to increase or reduce my stock market investment. To make these stock market timing decisions in a rational way without letting fear or greed drive me to do things I would later regret, I use the Stock Trend Investing strategy and system.

 

Have you made any stock market investment decisions that were driven by fear or greed and that you later regretted? Register or login and share your experiences with the Stock Trend Investing community.