When it comes to timing, most investors ( Institutional investors included) are the worst. We tend to buy near the very top and sell near the bottom. The result, the average return for individual investors is 2.1 % ......before fees and inflation.
So , is there a way for us to "time" the market ? To know when to be in stocks and when to stay away ? The topic of "market timing" is a contrevertial one with investment "professionals". Looking at the definition of market timing , we read this : Market timing is the strategy of making buy or sell decisions of financial assets (often stocks) by attempting to predict future market price movements.
No one can predict future market prices, no matter what method they use. What we can do however , is use some tools , such as moving averages, and REACT to price movement, prompting us to get in or get out of the market.
One very simple way to do this, is to use 10 month moving average(MA) again a market index , such as SP 500 , or Dow Jones Industrial. If the index is above it's 10 month MA at the end of the month , we stay invested in the market. If the index fall closes below it's 10 month MA at the end of the month, we sell and go in cash ( or invest is short term bonds) . Let see the result of this simple strategy.
This blog has been created for two things :
1. Keep a journal of my recent trading
2. Sharing simple trading concepts that have been using successfully over the past 10 years.
This blog will be updated once a month with analyses of the markets, and my real portfolio updates. I hope you'll enjoy reading this blog and learn from it.