While there are no clear-cut answers to investing success, having a strategy in place when putting money into investment vehicles like exchange traded funds (ETFs) will help create a more efficient portfolio for your clients. But what are you supposed to do in the middle of one of the most frustrating types of markets: the trendless market?
Trendless markets (also called sideways markets) are easily identified in that they lack a trend in either direction. A few good days are followed by a few bad days that result in increased buying and selling, making investing a hair-pulling experience.
If you’re tactically managing your clients’ portfolios, then you know what a frustrating year it’s been for those who take a more hands-on approach to investing.
For example, if you are following the 200-day moving average with a stop loss of 8%, you’ve no doubt noticed that most indexes have moved 8% up or down and crossed their 200-day moving averages multiple times so far this year. This is the worst type of market for trend followers.
What can you do?
1. Remember that you’re not alone. In trendless markets, virtually no one is making any money.