Proceed with Caution In terms of investing, now is the time to have your absolute strictest discipline in place. Let me give you an example. Yesterday, I saw numerous signals that would typically mean a big "risk-on" rally was about to begin. Specifically, I noted that the Volatility Index (VIX) was breaking DOWN… The Long-Term Treasury ETF (TLT) was breaking DOWN… And Freeport-McMoRan (FCX) – the largest copper producer in the U.S. – was getting ready to break UP. Here's why this is significant. The VIX measures investor sentiment. A breakdown in the VIX means investors are less concerned the markets. The TLT is a safe-haven that rallies when investors are flocking to safety. So a breakdown here also means investors are less concerned the markets. And finally, FCX produces copper, a commodity that is closely aligned with economic growth. So a break to the upside means the markets are beginning to predict greater economic growth. Taken together, these three signals would typically mean "BACK UP THE TRUCK AND BUY STOCKS!" However, I had EXPLICITLY stated to myself and my clients that I would NOT be buying stocks. Let me explain. Maintaining Discipline I noted that I would not be buying stocks unless the credit markets signaled the "all clear" by breaking ABOVE their resistance zones (the red zones in the chart below). This was my discipline – not to buy stocks until credit, which typically leads stocks, indicates it's safe to do so. And yesterday, this DID NOT happen. Based on this discipline, I did not buy stocks yesterday, nor did I urge my clients to do so either. And this morning as the markets are a sea of red, you better believe I'm glad we didn't! Had I let my emotions get the better of me – particularly my excitement that stocks might be getting ready for a big rally as indicated by the VIX, TLT, and FCX – I would have gotten taken to the cleaners. This is what I mean by staying calm and maintaining your discipline. So with that in mind, my advice to you on investing and life in general right now is to stay calm. If something gets you worked up (the news, social media, whatever) AVOID IT. And if something gives you a sense of calm or peace… DO IT MORE THAN USUAL. This is the only way to get through this mess. Best Regards, Graham Summers Editor, Money & Crisis |
Tidak ada komentar:
Posting Komentar