One fast way to total frustration and hair pulling is to read the predictions and forecasts for the coming year and put your full faith behind them. Forecasts might be informed, but they can also turn out unlike anything anyone expected. Dust off your strategy and look at exchange traded funds (ETFs) instead.
Every year is a gamble for investors in the market. No matter how much research you do, you simply can’t predict the market? Tom Petruno for Philly.com says that there really is just one new year tip that has true value for most investors: Focus on what you can control about your finances, and admit you’re powerless over most of the rest. [An ETF trend following strategy for you.]
The best approach is to have a good defense, meaning that you should approach the market with sense and have a strategy in place before you move forward. This includes setting a stop loss, which is a set point at which you will sell. [A new strategy for a new year?]
We use the 200-day moving average to determine when we’re in and when we’re out. When a position is above its 200-day, it’s a buy signal. When it drops below or 8% off the recent high, it’s a sell signal.
Most importantly, use your strategy. You can have the most brilliant investing plan on the planet, but if you don’t use it, it won’t work.
For more information about strategy, check out The ETF Trend Following Playbook.
For more stories about trend following, visit our trend following category.
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.