After the first quarter of 2010, many investors are feeling even more confident – enough to get back into exchange traded funds (ETFs), if they haven’t already. What’s so great about the markets right now?
The first-quarter reports provide a stark example of how the market runs in cycles, says Gayle MarksJarvis for The Chicago Tribune, and for those of you who rode out the rough times and moved back into the markets when positions crossed above their long-term trend lines, you were rewarded. Stocks have been in a mostly steady uptrend since March 2009 after one of the most volatile times in market history.
However, some of the investors who ran to the bond market once the equities markets looked bleak are finding a not-so-pleasant surprise. Bond funds go through cycles, too, and can lose money when interest rates are climbing or are expected to climb, which is expected to happen some time this year.
What does this all add up to? It’s up to you to approach the markets with a solid strategy in place. By setting a point of entry and an exit point, as well as employing a stop-loss, you’ll be able to leave your emotions on the sidelines with enough practice. [Don’t Get Caught Sans Strategy.]
Buying back in after such a roller coaster ride can be an emotional and difficult decision. The trends, however, are firmly in place, and you simply can’t fight them. Your strategy will protect you if you trust it and use it. [Read More About Trend Following Here.]
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.