As a result of the market’s collapse, the prices of stocks and exchange traded funds (ETFs) are now at levels not seen in at least a decade. This presents a major buying opportunity , and by using the 200-day moving average, you can pick your spots.
Some major assets are priced at 1999 levels, and if the current situation resembles past ones, there may be opportunities on which you can capitalize, remarks Stacy Johnson for Wise Bread.
Case in point: housing prices have been greatly reduced, and commercial properties may now provide better cash-on-cash return – not including tax write-offs that may make them extra enticing.
- iShares Dow Jones U.S. Real Estate (NYSEArca: IYR): up 19.8% year-to-date
- iShares FTSE NAREIT Industrial/Office Complex (FIO): up 17.9% year-to-date
Another example is the stock markets. After the spectacular gains since the March lows, the stock market is still lower than it was prior to January 2000.
- SPDRs S&P 500 (NYSEArca: SPY): up 20.3% year-to-date
If you are one of the lucky few that does have money but doesn’t know what to do with it, luxury items have cheapened. The opportunities found in lower prices don’t come often.
- Claymore/Robb Report Global Luxury (NYSEArca: ROB): up 50.5%year-to-date
In the sage words of Warren Buffet, “be fearful when others are greedy and greedy when others are fearful.” It is also prudent to have a plan in place before you invest. We use the 200-day moving average to choose those areas that could be about to enter a long-term uptrend. You can read more about the trend following plan in our book, The ETF Trend Following Playbook.
For more information on trend following, visit our trend following category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.