How can you cope in this new economy?
While we’re staunch advocates of eliminating emotional decision-making when investing and approaching decisions with a clear, rational head, the best move may be to have a strategy. Why?
- We’re seeing more booms and busts. If you’re buying and holding in these kinds of markets, you could be losing a lot of ground. The S&P 500 is still below where it was 10 years ago, which means that if you bought and held it, you’d be worse off than you were a decade ago. Buy and hold is a strategy may have worked before, but today’s markets require a different tack.
- A strategy will enable you to focus your energies on what’s important, whether it’s your hobbies, researching stocks or watching “Dancing with the Stars.” You’ll have “found” time that once was spent fretting over whether to buy, sell or hold. [New Year, New ETF Strategy.]
A simple strategy we suggest is trend following – watch the 200-day moving average to pick your spots and have your stop loss ready for action. You can learn all about how to follow trends in The ETF Trend Following Playbook.
For more information on trend following, visit our trend following category.
Max Chen contributed to this article.