The State of the Markets
Wednesday, January 8, 2014
At this time of year, it is natural for investors to want to make adjustments to their portfolios. This is also the time when folks tend to peer into their crystal ball and try to figure out what to expect next from Ms. Market. Everywhere one turns these days there are predictions. Predictions for stocks, bonds, oil, gold, real estate, currencies, etc.
However, the bottom line is this is essentially a useless exercise.
Think about it. Do you really know what moves the market each day?
Do you know how the market will react to tomorrow’s data?
Do you know anyone that can tell you with any degree of consistency what the market will do today? Or tomorrow? Or the day after?
No. In reality, all investors can really do is attempt to humbly understand Ms. Market’s moods and try to play the game accordingly. As professional investors, this means monitoring a vast array of indicators designed to put the odds of success in our favor. To be sure, such an approach doesn’t always work perfectly. However, treating this game as a business and using some math along the way can indeed improve your results over time.
Making Sense of the Game
In our shop, investment decisions are guided by models, indicators, and rules. Our goals are to (a) stay in line with the major trends in the market and (b) try not to get creamed when the bears come to call. Before you get too excited though, it is VITAL to recognize that there is no perfect indicator, signal, or system. But if one understands what generally drives the market and how the game tends to turn out over time, you just might stand a fighting chance of succeeding.
As such, let’s spend the rest of our time together today reviewing some key market models and indicators in order to see if there isn’t a message to be gleaned…
David Moenning is the founder and chief investment strategist for StateoftheMarkets.com, a website dedicated to investor education and portfolio analysis. Mr. Moenning is also President of Heritage Capital Management, a privately owned, investment management firm. Founded in 1989, Heritage is focuses on risk management and an “own the best and ignore the rest” equity selection strategy.
For up to the minute updates on the market’s driving forces, Follow Me on Twitter: @StateDave (Twitter is the new Ticker Tape)
Positions in stocks mentioned: none
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.