Before you jump the gun and call it quits on the market based on a tough week for the market, I want you to know a few things;
1. Since 1980 the average intra-year decline in the SP500 has been roughly 14%. 26 out those 34 years despite the average intra-year drop the market closed positive, 76% of the time. That does not mean that the declines were not painful, its just a reminder that the market goes UP and DOWN not up OR down. And, draw-downs are unavoidable, there is no sense in trying to avoid what cannot be avoided.
2. Its never been wise to be a bear for too long. In the last 89 years stocks closed down 20% or more 6 times (7%). 35 out of the last 89 years stocks delivered 20%+ returns, (39%). Try to minimize your losses but never forget that the real game is played on the long side.
3. When the market gets volatile less is better and a proven market timing system might be of tremendous benefit, this will keep you from jumping the gun. Investors Business Daily market timing system comes to mind. You can find this information daily in the B-section of the newspaper. What you want to be in the look for is when their market pulse goes from "market in correction" to "market in confirmed uptrend". I found that their market timing system works a lot better after corrections rather than when they are calling for a correction, no system is bullet proof.
4. Time is your best investment tool, better than RSI, sentiment polls, MACD, etc...Cut losses, live to fight another day.
5. Realize that there is a time to be aggressive and a time to just move a couple of pawns around just get a feel for the environment.
6. Stay thirsty, don't disengage.
Getting Started Is Easy
Wednesday, July 8, 2015
6 Things You Should Know Before You Sell Everything
"Frank began his career on Wall Street nearly two decades ago. He worked alongside some of the most respected traders on the street. He quickly realized his true talents were in his ability to interpret market technicals as well as behavior. He was a full-service broker until 2011 when he decided that his no-nonsense approach and expertise was better suited as an independent rather than under the reins of the brokerage business. Since his transition, Frank founded Zor Capital LLC and had successfully managed the portfolios of high net worth individuals. Outside of the cliche cookie cutter approach. His achievements and advice have been featured by CNBC, FOX Business, Yahoo Finance, Benzinga, Wall Street Journal, and CNN Money. Frank is widely regarded as an influential trader in the industry."