The age-old strategy that investors have stood by, the buy-and-hold strategy, has been tested and market players are now seeking exchange traded funds (ETFs), among other vehicles, to establish a different relationship with the market.
The technical indicators are becoming the norm for market players and long-term investors who are no longer staying on the sidelines and watching, as the recent market volatility has left them burned. CNBC reports that investors are watching temporary market tops and bottoms as their buy and sell guides, using funds instead of single stocks as their tool.
The markets’ volatility has become accepted, and investors have taken on a traders role instead of a buy-and-hold strategy.
This is a reversal of the long-term investors trend, and it’s changing the investing landscape. What was once a solid, long term investment is no longer, and the market uncertainty, mixed with economic troubles has led the way to a new state of the “normal”.
We’ve been using the 200-day moving average for years, which identify the general market trends. The simple concept is that you should be invested when the market is above its 200-day moving average and move to money market funds when the market is below its 200-day moving average. With ETFs this same strategy and discipline can apply to all asset classes, global regions, sectors, long/short indexes, commodities and currencies.
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.