Has the recession, and market pullback scarred investors and consumers in a way that we never thought possible? Will shares and exchange traded funds (ETFs) be able to get back to levels once seen before?

The real question happens to be whether the Great Recession has finally come to a close. The consensus seems to be that it’s not over quiet yet, but we’re closer than we were just a few months ago.

One encouraging sign, reports Jane Bryant Quinn for Bloomberg, is that the Economic Cycle Research Institute’s U.S. Long Leading and Weekly Leading indexes are up sharply from their December lows. These upturns correctly forecast a recovery within four months in the last 16 of 17 downturns.

If, and when growth resumes in the United States, the government’s massive policy response is what we’ll be thanking. But now we have to start looking ahead, overcoming our fears about re-entering the markets and find the areas that are moving, or that are showing some potential of moving.

Here are some tips to find those areas and overcome your fears:

  • Everything’s Got A Trend. Remember, not all sectors are going to come out ahead – pick your spots by watching the trend lines to see what’s moving and for opportunities you can participate in. This method also helps to cut down on your emotions, because just as selling is emotional, buying can be as well- especially after a period like we just went through.
  • Visualize Losses. Rather than focusing on profits, decide how much you can stand to lose on each trade before you take a position.
  • Know Your Pain Threshold. By putting an actual dollar amount on how much you can stand to lose, you can approach with a strategy and get out when you want to wait the market out.
  • Keep a Bottom Line. Consolidate all accounts on a spreadsheet to get a sense of the bigger picture. Winning a few trades here and there does not mean your account is alright.
  • Justify Your Stance. If you’ve spotted a trend and you want to take a position, but you’re afraid to, do some additional research that supports your position. It can help make you more comfortable doing it if you know the whys.

Many investors might be fearful of the markets and the possibility of losing more money, but if you stick to watching the trends, you can help leave some of those emotions on the sidelines.

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.

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