The market finds itself in the midst of another difficult stretch. It's not surprising. We are still in the middle of a long term secular bear market. These secular bears last from 14 to 20 years. The good news is that we have already gone through 10 years of it (it began in March 2000). So, no matter how you look at it, we are more than halfway through. The bad news ~ we have a few more years to go.
Based on lessons from the past, we have seen the worst of this long term bear. The 50%+ drop in 2008 and 2009 is similar to the 50%+ drop we saw in 1973 and 1974, the middle of that long term bear market that lasted from 1966 to 1982. Nevertheless, we are going to see very choppy action for the next few years and this is going to demand short-term to intermediate term trading tactics. The market isn't strong enough to put on any kind of sustained upward momentum. In this market you need to be fast in and fast out. You need to go long at the precise time and you need to go short at the precise time. There is little room for error. For those who just decide to invest for the long haul, you may experience a gut-wrenching roller-coaster ride.
A short -term to intermediate term trading plan could secure a lot of gains though. CAN SLIM (acronym) will still be successful:
C Current Quarterly Earnings per Share (EPS): The Higher the EPS, the Better
A Annual Earnings Increases: Growth over a period of time demonstrates strength
N New Industry, New Products, New Management, New Company, New Highs
S Supply and Demand: Be Attuned to Volume in Relation to Price Movement
L Leaders: Go with the Leading Stocks in the Leading Industries
I Institutional Sponsorship: Invest with the Best of the Professionals
M Market Direction: Don’t fight the Tides; Be Attentive to their Changes
However, your holding periods will have to me moderated. Instead of holding for six months to a year or longer, you will have to ratchet that holding period down considerably to days, weeks or months. Otherwise, the market will come back in and wipe out all your gains...and leave you with losses to show for all your hard work.
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2 comments:
Coach you are back!!! This is crazy..I was cleaning my bookmarks and figured I would give it a try and you are posting. I miss that philosophical advice you used to gived. Hope all has been well with you and yours. I never commented much, but my toolbox is more dense thanks to you and what you gave me. Glad you are back.
Hey how's it going? I took a break for a while. Hope all is well.
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