PILOTS, PROFESSIONALS, AND ENTREPRENEURS SHOULD REDUCE THEIR PORTFOLIO RISK
Reading Time:7minutes
Please Share This Post
Let
me share with you a story about one of my clients named John, a
59-year-old retiree who was looking to secure his portfolio. John had
experienced market volatility before, and it had caused him a lot of
stress and sleepless nights. He came to us for a different way to
manage his investments in a more conservative manner. After he reviewed
our investing strategies to find out which one fit his financial goals
and risk tolerance best and did thepersonality test,
he decided to use our Consistent Growth Strategy. He felt that this
strategy would help him feel more secure and avoid market volatility
while producing nearly two times higher annual returns than what he was
currently experiencing with his advisor.
However,
just a few weeks later, John called to tell us that his son, who was a
financial enthusiast, had convinced him to take a more aggressive
approach with a different service. Despite our warnings about the
potential risks, John followed his son’s advice, and what happened next
is likely exactly what you are thinking. The market ended up declining,
causing John to lose a significant amount of money from his portfolio.
Now, is there anything wrong with listening to the advice of
well-meaning people? No, of course not. But, as in this case, the
element that John and his son forgot to account for was that the son
has years to recover from investments that do not pan out. John no
longer has that luxury.
Unfortunately, I
see this all the time. A younger investor (and even some far more
experienced ones) falls for a strategy that trades all the fast-moving
stocks, is aggressive, and has a high level of risk. The issue is that
everything is good until it’s not, and when the losses build, the
investor quickly finds out the strategy is way riskier than he or she
wanted or can stomach. But by this time, it is much too late, and the
damage has been done.
Wealth Math – The Link Between Drawdowns And Age
You may not know this, but the math changes in how investing works once you are 50+. I call this“wealth math“or lifestyle investing, and you can make more money with a lower annual return, which surprises almost everyone.
It’s
important to review the investment strategy being used for your
portfolio at each stage of your life to ensure that you are not taking
too much risk. Doing this can help you avoid losing money and
experiencing unnecessary stress. Based on our experience of talking to
innumerable people, nearly all investors over 50 have their money
invested in a much higher-risk strategy than they realize.
If
you own stocks and bonds and are invested by way of the passive
buy-and-hold strategy used by firms like Schwab and Fidelity or
financial advisors in general, then you best ask them to find out how
much you stand to lose during thenext bear market, which is just around the cornerfrom
the looks of things. Market volatility is part of investing, but with
the right guidance, you can secure your investments and achieve your
financial goals without the risks and rollercoaster rides.
If
you want to see the level of risk your retirement account and lifestyle
have, you can get a taste of that by reading this post on thetwo types of drawdowns that kill investors’retirement accounts and lifestyles.
My investment philosophy
Keep it Simple
I
believe in keeping things simple and easy to understand. If an advisor
is giving you information that is too complex and you don’t understand
it, there are two reasons why. First, they don’t realize that you are
struggling to understand. The solution – speak up. You are paying your
advisor a good chunk of money, and encompassed in that fee is all the
time you need to understand what the heck they are talking about. It’s
your hard-earned money, and it’s your future, so take an active role in
understanding what is happening to it.
Reason
number two is a little more nefarious. It’s possible that your advisor
is trying to prove how smart they are, which better serves their
interest than yours. This tactic is often used to camouflage that your
money is being spread out like peanut butter across all different kinds
of stocks and assets. What this ‘diversification’ does is act like a
shield. When one stock or asset begins to fall, a non-fiduciary bound
advisor can easily say something along the lines of “but look at what’s
happening over here” and thus distract you from what can potentially
become a huge loss. If the traditional buy-and-hold diversification
strategy is being used, which is a high-risk strategy for anyone
nearing retirement or already retired, it is again up to you to
understand what that actually means. I have found that no one cares
about you or your money as much as you do, and if you don’t take the
time to know what is best, then you are destined to have subpar results
like everyone else.
Many of our
subscribers are surprised at how easily our investing strategy can
guide them with their investing decisions. I’ve heard from so many
individuals – sharing how they now understand what and why we invest
the way we do and how we’re providing them the education, confidence,
and peace of mind that they always wanted when it comes to their
investments.
My Consistent Growth Strategy newsletter can help you in two ways.
First,
is that it provides detailed investment signals to follow. These trade
alerts are complete with symbols, entry prices, protective stop levels,
and price targets for ETFs. You can choose to simply copy these trades,
which I also trade in my account.
Second, is that if you are busy, don’t know much about the markets, or just want a done-for-you solution wheremy trades are automatically executed in your retirement account,
I offer that as well for no additional cost using a third-party
autotrading broker. This is similar to the robo-advisors like
Betterment, and Wealthfront, with the exception that I only charge a
flat newsletter signal subscription fee and that my strategy manages
positions and risk. Traditional robo-advisors use the old buy-and-hold
method, while charging an asset under management (AUM) fee, which can
be much more costly.
Slow and Steady Wins
I
believe in conservative strategies. Our best customers are the ones who
want to ensure they’ll not run out of money in the end, meaning they
want to preserve their capital and generate returns to live on during
retirement. They don’t care about making the highest returns in the
shortest amount of time possible. They care about having the best
advice that will make their money last and ensure they’ll be okay in
retirement.
My investing strategy is
different. I don’t believe in huge diversification, nor do I believe in
holding assets that are falling in value. Because of this, investors
using my conservative high-growth strategy not only reach retirement,
they thrive like never before.
Take a look atmy strategyvs.
the buy-and-hold method for the past ten years for a retiree starting
with $1,000,000 and withdrawing $50,000 a year. As you will see, with
position and risk management (which makes for a more consistent
return), investors become wealthier in retirement vs. just treading
water.
Belief and Follow-Through
Finally, to be successful, you must believe in the process andhave the self-discipline to follow through.
If you are nearing or already retired, then the most important thing
for you to understand is your new financial situation is all about
capital preservation and risk management. This cannot be achieved with
a stock and bond buy-and-hold strategy, so check with your advisor
today to find out how your money is invested.
With
the knowledge you learn, you can take the appropriate action and
implement a well-designed strategy built for retirees so you can avoid
all the issues and concerns most suffer from. Once you see how your
goals and dreams can come true in retirement and how you will be
equipped to experience them, you can take your family and friends along
for the ride.
So, if you are not happy
with your investment returns and are stuck having your capital plopped
into the market, hoping it will generate the returns you want and need,
then you should review The Technical Traders Ltd.’s investment methods
and how we can help you live the life you want.
I hope you found this article useful. If so, please share it with others on Facebook, Twitter, and LinkedIn!
Our OEX trendline support chart may be suggesting lower, looking at our RSI oscillator.
OEXTrader.com
SHOCKINGLY DIFFERENT INVESTMENT RESULTS AND HOW TWO PILOTS INVESTED $1,000,000
Reading Time:6minutes
Prepare
to be amazed by the vastly different outcomes achieved by two pilots
who each invested $1,000,000. You won’t believe the stark contrast in
their results!
Eons ago, in high school,
I had an old-timer math teacher who would get upset every year he was
forced to use a new math textbook. His main argument was that “math
hasn’t changed,” which, as we know, is true. He would also talk about
how much money it costs the schools to buy new textbooks, how much work
it added for everyone, and that the whole thing made no logical sense
from a mathematical point of view.
With
that said, and pretty much ignoring all the ‘behind the scenes’ stuff,
the one question we all asked as kids was, “Will I ever need to know
this stuff?” We were assured that we would, and as it turns out, we do.
Using The Math We Learned As Kids
Now,
meet John, the Consistent Investor, and Mike, the Aggressive Trader.
Both are retired airline pilots. John has always been a careful and
deliberate investor, preferring to stick with lower-risk strategies
that may not yield the highest returns but are less likely to result in
significant investment losses and long periods of time without any
growth (also known as drawdowns). Mike, on the other hand, is a
risk-taker who believes that faster-moving stocks mean a greater payoff
and that the more trades he could make, the more potential he would
have to grow his account. Unfortunately, Mike is not aware of thetwo silent killers of investment accounts.
Both
John and Mike have built up substantial savings over the years and are
eager to start drawing on their investments to supplement their
retirement incomes. They each have one million dollars to work with and
plan to withdraw $50,000 per year to support their retirement lifestyle.
Average Annual Return Is Not As Important As Consistency During Retirement
Once
you cross the age of 50, how you invest is much more critical than ever
before. It’s not about how much return you can generate each year.
Instead, it’s all about low volatility and consistency. As you will see
in the table below, it’s the evolution of how we invested in our early
years.
I call this “Wealth Math,”
which is all about protecting our retirement accounts from losses and
long periods of no growth. The annual returns may be lower than more
aggressive strategies, but investments aligned with Wealth Math are a
more consistent way to generate income. At the end of the day, with
wealth math,less-is-more for retirees.
Surprisingly,
women naturally tend to invest this way, and have more money in
retirement than men who actively trade, which I explained in the post “Why Women Make For Better Investors, Sorry Guys.”
Over
the course of ten years, John’s consistent portfolio only averages 6%
return, while Mike’s generates 8%. However, when it comes time to sell
shares to generate cash to fund their retirement, John ends up with
more money than Mike, even though John earned a lower rate of return.
This is because John’s portfolio is designed to minimize potential
losses, while Mike’s is more volatile and therefore requires him to
sell more shares when the market dips, and his account is worth less
money during some of the times when he had to withdraw money.
While
no one can predict where stock and bond prices are headed, we can
manage our investments to generate more consistent returns and reduce
account volatility. By focusing on strategies that prioritize stability
and minimize risk, John was able to come out ahead in the end. Mike,
who was more focused on chasing big returns, ended up losing more money
in the long run because of something called “sequence of Returns Risk.”
Most Damaging For Retirees – Sequence of Returns Risk
One
of the most damaging things a retiree can do is liquidate stocks at the
wrong time. Let’s say you have 100 shares of Company A and 100 shares
of Company B. If Company A is priced at $100 per share, you have to
liquidate ten shares to get $1,000. This leaves you with ninety shares
participating in any rise in the stock’s value. If Company B is $200
per share, you only have to liquidate five shares to get that same
$1,000, leaving you with ninety-five shares participating in rising
stock prices.
Now
imagine you need to withdraw another $1,000, but the price of Company A
has fallen to $50 per share. You now need to liquidate twenty shares to
get your withdrawal, leaving you with just seventy shares participating
in the upside potential. If at the same time, Company B’s share price
has risen to $250 per share, you need only liquidate four shares,
leaving you with ninety-one shares.
When
depressed assets are liquidated early in retirement to meet income
needs, it quickly reduces the number of remaining shares that can
participate in any market recovery. Over a short period, with
repetitive liquidations, especially in a bear market, a retiree can run
out of money far sooner than expected. This risk increases when an
investor refuses to consider cash as a position during a market
downturn.
To avoid sequence-of-returns
risk, it’s critical to sidestep bear markets and take advantage of
falling prices to generate additional returns through the use of
inverse ETFs or by owning different assets which are rising.
Thankfully,
through the use of technical analysis and risk and position management,
investors can identify trades and reversals to know when to enter and
exit positions. The team at TheTechnicalTraders are able to read the
price charts and follow major market trends, which this article details
–how investors are challenging the status quo buy-and-hold strategyto create a bear-proof retirement account.
Consistent Growth Strategy VS. Buy-And-Hold Results
As
mentioned before, withdrawing funds when a portfolio is in a drawdown
can be very costly to your long-term financial outlook. But with a
tactical investing strategy the like theConsistent Growth Strategy(CGS),
an investor should not have any big losses or multi-year periods of
negative returns. That means a portfolio will generally be near a high
watermark (all-time high), leaving the investor free to withdraw
capital as needed.
Concluding Thoughts:
While
there is no guarantee that investments will always yield positive
results, a well-managed portfolio will likely have more consistently
positive results than negative ones. It’s important to understand that
results don’t come in a linear fashion. Just like flying an airplane
across the country, it’s not as simple as going in a straight line
because, with the winds aloft, the shape of the earth, and its
rotation, a straight-line approach will not get you to where you want
to go. Knowing your portfolio allocation’s long-term average return and
the maximum potential drawdowns (losses) is essential for success.
Investors
who can change course when needed with their investment plan are able
to continue building their wealth and improving their retirement
lifestyle through the use of position and risk management like the CGS
method.
If we see a breakout above 34000 level, it may have to be a big breakout to overcome the two lower indicators.
OEXTrader.com
Febuary 12, 2023
Bulls, want to see VIX below 26.77 on this weekly chart.
OEXTrader.com
HOW TO BECOME A WORLD-CLASS INVESTOR WITHOUT SELF-DISCIPLINE
Reading Time:9minutes
If
you’ve had any education in trading at all, you’ve heard that
self-discipline is a major key to success. I want to touch on this
topic toreinforce this point!
Understanding the psychology of trading is the distinction between
those who win and those who don’t. Thankfully, there is a way for
individuals who struggle to properly manage their losses to take full
advantage of the stock market.
Personally,
I don’t think trading needs to be complicated. Keeping things simple is
the key to repeatable success, as it helps individuals with poor
self-discipline stay in control and on track. I’ve studied many of the
world’s top traders, and they only use a few basic strategies in
combination with self-discipline when it comes to position and risk
management.
This does not, however, mean
trading is simple. There is a lot of room for failure when it comes to
self-discipline and trade execution, and there isn’t any trading method
that’s 100 percent bulletproof. All strategies have losing trades and
losing years.
The most effective way to
become successful as a trader is to learn directly from someone who has
already made the mistakes you may just be headed straight for and not
only survived but persevered and triumphed through the struggle.
Self-Disciplined Traders Look Before Leaping
One
of the most common mistakes inexperienced traders make is to trade when
they see an opportunity they think might be too good to miss. Jumping
into a position based on a hunch or on the belief that you may be
missing an opportunity is no different than gambling. Men struggle with
this issue the most, and it tends to come at a high cost of wasting
both time and money. In fact, I talked aboutwhy women tend to be better long-term investorson
my blog. All of us, at one time or another, have felt a rush of greed
for a trade based solely on the desire not to miss out on an
opportunity. And, yes, that includes me.
Self-discipline
means a trader applies skill and logic to their trading. They learn
every day, and they use what they know to make intelligent decisions.
They don’t worry about missing out; they focus on protecting their
capital first, then look for quality trades second.
How I Became A World Class Investor
In
2001 I started sharing my market analysis online through an email
newsletter. One of my main goals was, and remains, helping to
fast-track a trader’s learning curve from a beginner to a more advanced
stage within a few months. Throughout my evolution of teaching others
how I trade and invest, the level of self-discipline I had further
strengthened as well.
By 2008, I had
lived and breathed trading, studied strategies, and implemented them
with success. I decided it was time to make the learning curve of
reading the markets through the use of technical analysis even easier,
faster, and more automated!
After
countless hours of analysis and with the help of multiple programmers
to convert my knowledge, expertise, and strategies into a real-time
automatedtechnical analyst,
I was on my way. I programmed the system that I had been manually
trading since 2001, which I still use today, because it works
exceptionally well.
The system does all
the time-consuming number crunching so that I can accurately identify
current market trends. It also provides trade details like position
sizes, entry signals (long or short), profit-taking levels, and
protective stops.
When using this
strategy, most of my decisions are already accounted for, essentially
making it easier to trade the markets and not rely so much on my
self-discipline. I can anticipate the market’s entry and exit points
ahead of others and be mentally prepared, knowing I may have to take
action within a couple of days. I find this very helpful when dealing
with emotions like FOMO.
With all that
said, you don’t need to know and trade everything. The key is to find a
few simple strategies that work for you and master them. Knowing what
strategy is best for you is critical for your success, as it must fit
withyour personality, available time, self-discipline, and current knowledge of the financial market. I shared a post that can help with this titledWhat Type Of Trader or Investor Are You?
How You Can Become A World Class Investor
Only
you can be accountable for your actions. All the books, audio, videos,
manuals, courses, weekend seminars, or mentors cannot give you
self-discipline. That must come from you. That is the reason why it’s
called SELF-DISCIPLINE!
So what does
this mean? It means understanding that to trade successfully requires
an extraordinary amount of self-control and self-understanding. It
requires the ability to quiet the mind and recognize when fear or greed
(emotions) start to creep into your decision-making process. You must
have the awareness and discipline to step back and review your strategy
checklist and follow it when the situation goes against your feelings.
I
have read a lot of trading books, and by far, the most exciting ones
have been about what other successful traders have done and are doing
to build their wealth. The book Market Wizards, by Jack Schwager, is a
thorough account of trading because he interviews the world’s most
successful traders.
“What
sets these traders apart? Most people think that winning in the market
has something to do with finding the secret formula. The truth is that
the common denominator among the traders I interviewed had more to do
withATTITUDEthan APPROACH.”
JACK SCHWAGER
Two aspects of psychology you need to succeed:
1.You must trust your trading method.
2.You must trust yourself.
It’s
obvious that to be successful in trading, you need a viable trading
method with setups, rules, and a plan that works. Without one, no
amount of self-discipline is going to help you. On the other hand, if
you don’t have enough self-discipline to follow trading rules, then you
can’t trust yourself to know you will do the right thing (like selling
a position that is in decline). This is where most people fall short.
The
journey ahead will present challenges and test even the best-laid
plans. Expect to encounter failures along the way. To succeed, it’s
crucial to not only have financial stability but to also have a strong
mental fortitude that will endure the tough times that come with
achieving success.
As depicted in the image below, success is a path with peaks and valleys, including both triumphs and failures.
Below
is a quick litmus paper test that will help you know if you are more or
less gambling your money vs. managing your money for a better lifestyle.
If You Answer YES, Then You Have Foundational Trading Processes in Place
Do you have a detailed trading plan to work from?
Do you have clearly set up criteria for each trade and adjustment?
Do you use a hard protective stop for every trade?
Do you have a routine that gets you back on track when you’re trading is off?
Do you prepare for your trading day with pre-market notes?
Do you keep track of all your trades and review closed trades?
If You Answer YES, Then You areDestined To FailUnless….
Have you had several winning trades, followed by larger crash & burn types of trades?
Do you experience hesitation, apprehension, uncertainty, or fear when you are about to trade?
Do you double down after a losing streak or in the midst of losses to regain profits faster?
Have you ever gone into the “I don’t care” mode and watched your money disappear when in a trade?
After losing a large amount of money, are you challenged emotionally by every trade after that loss?
Were you successful in another profession and found trading is affecting your confidence and ego?
Do you lose sleep over your trading and investment positions?
Are you exiting a trade too quickly instead of waiting for the trade to mature to its full potential?
Are a high percentage of your trades defensive?
Do you logically know what to do in a trade but find you are not taking the actions you should?
The Brutal Truth
The
technical aspect of defining a trading method is academic; the
psychological power to focus and remain disciplined is much more a
matter of learning thetechniques of positive self-talk and setting proper expectations, which leads to better self-discipline.
That
means that trying to beat the market by long shots (large
directional-based trades) is not only difficult to do consistently, but
it also leads to a level of volatility that will not sit well with you
over the long term when losses stack up, or you find that your account
is not any larger after a couple of years. Individuals who swing for
the fences on trades like these tend to struggle more during bear
markets.
Removing human biases as much
as possible by sticking to a proven strategy and focusing on capital
preservation and low-risk victories is the only way to safely navigate
the market to avoid large market corrections and bear markets.
How To Be Successful With Poor Self-Discipline
A
simple, well-thought-out trading strategy will feel slow and boring.
That’s because all the possible scenarios have been figured out by the
strategy rules (position size, stops, profit-taking levels, etc.), and
all that is required is to follow the trade signals.
Just
look at the graph below for the last couple of years. The average
investor without a plan or self-discipline has lost money with the
buy-and-hope strategy vs. those who use a different approach which only
holds assets rising in value as I do.
I
always try to remind active investors that if a strategy is SIMPLE,
then it’s REPEATABLE. If it’s repeatable, then it’s BORING. If it’s
boring, it means you have MASTERED it. And if you’ve mastered it, it
means you will be far more likely to experience CONSISTENT PROFITS.
So,
in conclusion, if you are struggling with any of the things mentioned
in this article and you want to identify and profit from stock market
rallies and declines using ETFs, then I can help. I am here to lighten
the load and provide actionable trade and position management signals
with my Best Asset Now Sector Trading Newsletter or the Consistent Growth Strategy for
fast-tracking your way to retirement and boosting your retirement
lifestyle. You can manually trade these signals in your self-directed
account or have themautotradedfor you at no additional cost.
I hope you found this article useful. If so, please share it with others on your social networks!
Some
women say, “size matters,” and in this case, I have to agree. In this
article, I touch on how women’s investment behaviors compare to men’s.
Also, how retired women have a bigger savings account in the end
because of how they manage their money differently.
A
widespread assumption in investing advice is that women need to be
convinced to understand finance and are assumed to be risk-averse
spendthrifts. However, research shows that women consistently
outperform men in investing, leading to hundreds of thousands more
dollars in retirement savings. In addition, women spend more time
researching investment choices, take on appropriate levels of risk, and
have better age-based asset allocations, which is impressive given
women face an income-gender gap and generally make less money.
They
are also more likely to hold investments for the long term and remain
calm during down markets. Conversely, men trade more often without
enough research and reduce their net returns with extra commissions and
taxes. They also have the tendency to hold onto trades too long and
suffer severe drawdowns and losses. In short, to have more success like
women do, investors of any gender should follow a strategy and its
rules for buying and selling, exiting losing positions sooner, and
reinvesting the money into different assets that are rising.
Reasons Why Women Make for Better Investors
Long-Term Focus: Women tend to prioritize long-term investments and stick with a proven plan, which can lead to more consistent growth.
Prudent Approach: Women tend to have a more conservative approach to investing, which can result in less impulsive or risky investment decisions.
Collaboration and Seeking Advice: Women
often have a strong inclination towards seeking help and collaborating
with others, which can lead to better decision-making to preserve and
grow their capital.
In
short, women don’t have it easy, and the investment industry is very
male-dominated. Studies show women are more concerned than men about
accumulating enough money to retire, running out of money in
retirement, maintaining their lifestyle, and poor investment
performance. But, because they are more concerned about these things
than men are, it’s likely the reason why they do more research, plan
their investments, and then invest in their plan. As a result, they
tend to avoid getting sucked into hot stocks, commodities, or cryptos
as much as men do.
This interesting
topic about “size matters” regarding retirement accounts is vital. The
financial industry should take into account the specific investment
needs of women investors vs. mass market participants with FOMO who
think they need to own every shiny object mentioned in the media.
“There
is no greater pitfall than the one created by the retail investor
industry. They are ripping you off. You are incurring greater risks,
lower returns, and higher fees than you realize, and as a result, you
are in danger of not achieving your financial goals.”
RIC EDELMAN, RANKED BY BARRON’S AS AMERICA’S #1 INDEPENDENT FINANCIAL ADVISOR
I
have had some wonderful conversations with savvy ladies from Canada and
the USA this week. What I do fits well with how they want to protect
and grow their wealth. My main focus is on capital preservation, and
because I manage portfolio risk, the profits take care of themselves.
As a result, the Consistent Growth Strategy has above-average returns,
roughly two times the performance of the old buy-and-hold method, while
allowing us to avoid bear markets. This strategy has been hitting new
high-water marks every few months since 2007, and why investors in over
130 countries follow my CGS strategy.
One thing they both have in common, though, is that they both tend to use the buy-and-hold strategy. Inmy recent interview on Kitco news,
I talked about why holding investments after the age of 50 could be the
most costly financial mistake of their lifetime. Then, David Lin and I
dive deep into what everyone must know about investing.
The
icing on the cake with what I offer at no additional cost is that
anyone who uses an advisor and pays an AUM fee can have the CGS signals
autotraded in their self-directed account at no additional cost from
what they pay now with an advisor. In fact, most investors save
tens of thousands of dollars per year in fees, which is a nice big
bonus.
Regardless
of which type of trader/investor you are, if you can no longer take the
pain of losing money trying to trade, and can’t afford to ride out
another bear market and risk your lifestyle and retirement account,
then following one of my simple and proven strategies could be just
what you need.
We are seeing some divergence on our OEX trendline support chart.
OEXTrader.com
HOW TO PREPARE FOR A 37% CRASH IN 2023 THAT WON’T REBOUND FOR YEARS
Reading Time:7minutes
Recently,
I had the opportunity to discuss market and asset class cycles with
David Lin from Kitco News, which has gained a lot of attention. I
shared my view that we are currently in a complacency phase, not a new
bull market phase, and David probed me with some great questions, for
which he is well known.
Who I am now
For
those of you who don’t know me yet, my name is Chris Vermeulen, and I
am a technical trader who bases my analysis on Stan Weinstein’s
four-stage analysis of markets. This analysis suggests that we are
still in the topping phase (Stage 3), and 2022 was just a warm-up to
the start of the next financial reset.
During
the course of our chat, I shared with David my belief that though
precious metals and miners are leading the way, I feel it’s a false
rally. A reset is expected later in 2023 with lower prices across the
board for stocks, commodities, and housing, which will provide a great
opportunity to accumulate assets in the coming years.
I
think of the stock market as an ocean and use different strategies for
investing and trading the rising or falling tide, surfing the rallies
and corrective moves in price that regularly form like sets of incoming
waves. I focus on the big phases of the market and catch the wave-like
patterns using varioustechnical analysessuch as stages, volume flow, cycles, and market sentiment to determine my entry and exit points. I also stressa lotthe
importance of setting profit targets and having rules in place to
reduce risk. These position and risk management tools allow us to scale
out of positions while locking in gains and protecting our capital
should the market rollover.
At the
time of David’s and my talk, I was holding 100% cash and waiting for
the next market signal. He asked me, as a long-term investment signal,
what needed to happen before I got bullish. I said that I am waiting
for my weekly investing trend chart to turn positive, for consistent
money flow to return in specific sectors, and for the trend to turn up
before I would open positions once more. Wouldn’t you know it, but all
of this came together the day after our interview went live!
How I got there…
My
journey in trading started when I was 16 years old in a finance class
that issued a stock market challenge. When the semester-long challenge
ended, I had made $80,000 in virtual dollars, and that was all it took
to hook me in at an early age. These days, I’m a stickler for details
and not breaking or bending the rules with my investing because of my
training as a pilot when I was a teenager and due to a trading misstep
or two along the way.
I was taught the
rules and regulations of flying, which you must always remember, and to
follow a checklist for each stage of the flight. Failure to do so could
result in sudden death or a plunge so swift that it shakes the
foundation of who you are and who you want to be. That’s how I now look
at my trades and investments – short-haul or long-haul flights with the
need to remain focused 100% of the time.
David
dug deep, asking about a bad trade I had experienced, how I recovered,
and what I learned. I shared a recent one that turned into a $54,000
hit. A long-forgotten investment I had turned into a gold mine
(figuratively) when I randomly checked its status – yay for me! And
then, like a rookie, I didn’t take profits when I had the chance. I got
caught up in the excitement of unexpected ‘free’ money and kept
thinking it would go higher. Wow – was I ever wrong. I just fell
headlong into the trap that I so often talk about – emotional-based
trading and not wanting to sell an asset that is beginning to lose
money. So yes, even seasoned traders who know better can make mistakes
in their personal accounts.
Though the
graphic below is more geared toward the stock market as a whole, it
also highlights the emotions we can go through during the lifetime of
one trade.
Regretting
the whole scenario and lesson without doing something about it is just
not my style. So David and I segued into the importance of how knowing
your own personality type can turn you into a better trader. I brought
up an article I published,how 70% of individuals’ personality types do not favor individuals as self-directed traders or investors, and how a good portion of investors and traders would benefit with help from a newsletter service or advisor.
What I have learned along the way
David
made a great observation that people often feel worse when they miss
out on gains compared to when they lose money, and I agree. FOMO is a
big issue in trading, and people struggle to control their emotions and
actions. To help my subscribers with this, I built an indicator that
tells us when there is FOMO in the markets and where the price should
move next, higher or lower, based on the short-term extreme level.
This
interview with David was one of the best interviews I have done. David
asked all the right questions for listeners to see the complete picture
of how a trader and investor should look at the markets and manage risk
and positions, and how to prepare for what could be the perfect storm
to destroy any investors future who is 45+ and invested in stocks and
bonds. I wrote a detailed article about how investors haveStockholm Syndromeand
think wild fluctuations within their retirement accounts are normal and
that there is no way to avoid it. But that’s flat-out, not true. For
decades, the investment world has had everyone wrapped around their
finger doing what they are told about how to invest, and individuals
end up getting the short end of the stick.
In
short, if you want to know more about what I do and how I can help you
keep reading. I share my tactical ETF investment alerts via myCGS newsletter.
My disciplined approach helps individuals achieve and maintain their
financial and lifestyle goals. For those of you who are tired of the
stock market rollercoaster ride, and don’t have the time to ride out a
multi-year recovery, it is certainly worth a look.
I trade and invest differently. It’s a significant change from what has been done in the past, and because of that, CGS generates roughly2-times above-average returnsof
the 60/40 buy-and-hold method. Moreover, my strategy does this with a
fraction of the portfolio volatility compared to traditional investing
methods used by firms like Schwab, Fidelity, and financial advisors in
general.
Imagine
if you could sell your investments as they started to top, then revest
the money into different assets rising in value. Imagine never having
to hold falling positions again. That’s what I do!
Users
follow my email trade alerts in their self-directed brokerage account
or have the CGS signals autotraded for them at no additional cost.
Recommended tradable account size in a self-directed brokerage account
between $100K – $5M makes the service very cost-effective.
For
anyone who uses an advisor and pays an AUM fee, having the CGS signals
autotraded for you does not cost anything extra from what you pay now
with an advisor. In fact, many save thousands of dollars per year in
fees by using CGS, plus they have a strategy in place for capital
preservation during extreme market events like the COVID crash, and
bear markets.
