On the flip side of having an exit strategy when it comes to your exchange traded funds (ETFs), eventually there’s a time to get back in.
Is it now? There, after all, have been days with such high volatility that some funds rocket above their long-term trend lines, only to head south a day or two later. That’s why we do have our strategy of only investing in those funds that have moved above their trend lines, but we also look at the fundamentals. Was that just an unusually big day? Or is the trend moving up?
Many ETFs in the financial and other sectors are still way down. Some are off their highs by as much as 50%, and lose more on the market’s worst days.
Having an entry plan is just as important as an exit one: you don’t want to get in, thinking the worst is over, then finding yourself selling at a loss a few days later. Look at the trends and those areas that are moving instead.
We cover our strategy in more detail in a trend-following plan story we wrote earlier this year.
This strategy is also covered at length in our book, iMoney: Profitable ETF Strategies for Every Investor.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.